Vietnam’s Economic Outlook for 2026: Resilience Amid Global Challenges

As Vietnam prepares to step into 2026, discussions revolving around its economic trajectory and investment outlook heat up. With global uncertainties, shifting capital flows, and a rapidly-evolving domestic landscape, both policymakers and investors are rethinking their strategies to adapt to the changing environment.

Optimistic Perspectives at the Vietnam Investment Forum

The Vietnam Investment Forum 2026, held in Ho Chi Minh City on November 4, showcased a generally optimistic outlook from economists and financial leaders. Despite facing global headwinds, such as U.S. tariff policies and trends toward monetary easing by central banks, Vietnam displays notable macroeconomic stability and solid growth momentum. This duality of optimism and realism is critical as the country navigates complex economic waters.

Resilience and Strategic Adaptation

Dr. Le Duy Binh, Managing Director at Economica Vietnam, emphasizes the importance of context in evaluating Vietnam’s prospects. The past five years, marked by significant challenges—from the Covid-19 pandemic to various global disruptions—have strengthened the country’s internal capacity. “Despite these hurdles, Vietnam maintained growth rates between 6.5 to 7 percent, with several years even exceeding 8 percent,” he remarked, highlighting the robustness of the economy’s internal dynamics.

Looking ahead to 2026, Dr. Binh identifies four primary growth drivers. First, the global trade recovery, fueled by monetary easing in key economies, particularly the U.S. Second, public investment is gaining momentum, with faster disbursement rates and the completion of pivotal infrastructure projects. Third, private investment and foreign direct investment (FDI) are rebounding thanks to favorable regulatory reforms. Lastly, strong domestic consumption, driven by a population of nearly 100 million and rising disposable incomes, positions itself as a significant pillar of growth.

However, Dr. Binh cautions that maintaining the current pace of growth will depend on effectively managing macroeconomic risks such as inflation, fluctuating exchange rates, and public debt. He emphasizes the need for coordinated efforts between the government and businesses to navigate these challenges.

Inflation and Exchange Rate Concerns

Dr. Le Anh Tuan, CEO of Dragon Capital, addresses inflation risks while noting that exchange rate stability warrants close monitoring. “Vietnam’s economy remains highly dollarized, making exchange rate movements crucial for monetary policy,” he stated. Although global interest rates trend downward, domestic rates have ticked up slightly. Dr. Tuan advises that while an accommodative monetary policy is beneficial, it should be approached with caution.

An International Perspective

From a global viewpoint, Mr. Sacha Dray, an Economist with the World Bank in Vietnam, highlights Vietnam’s agile policy responses amid changing trade dynamics due to U.S. tariffs. With a year-on-year export increase of 23 percent, Vietnam’s exports to the U.S. reached $113 billion, marking a historic high. Nevertheless, the U.S. revised tariff framework—which imposes an average rate of 15.3 percent on Vietnamese exports—poses challenges. However, positioning Vietnam favorably against competitors like China and India within regional supply chains.

Despite numerous free trade agreements (FTAs) that Vietnam has yet to fully leverage, the groundwork for bolstering its export base is significant.

Rethinking Capital and Investor Confidence

In spite of solid fundamentals, Vietnam’s capital market appears undervalued to foreign investors. This paradox reveals not just short-term hurdles but also long-term opportunities. Dr. Tuan raises a critical question: why do foreign investors hold only about 14.5 percent of Vietnamese equities—the lowest in the region—especially given Vietnam’s strong economic fundamentals?

He pointed out the alarming trend of foreign investors net selling $1 billion in Vietnamese equities in 2024, followed by another $1.6 billion in just one month this year. The sell-off stems from lingering concerns relating to both domestic and external factors that have impacted investor sentiment. The strong correlation between Vietnam and China adds another layer to this narrative, particularly amid China’s capital outflows spilling over into Vietnam.

While Vietnam’s equity market has shown a rise of 20-30 percent since early 2024, some foreign funds have taken the opportunity to realize profits, reducing their exposure.

The Potential of Public and Private Investment

Dr. Tuan suggests that 2026 could herald a “reset” phase for Vietnam’s capital market. With foreign exchange reserves standing at just under $80 billion—equivalent to approximately three months of imports—the focus is shifting. Over the last five years, foreign investors have pulled nearly $12 billion from the local stock market. Without these outflows, Vietnam’s macroeconomic stability would likely be even stronger.

Echoing similar sentiments, Dr. Binh describes public investment as historically vital for boosting aggregate demand, especially after economic downturns. In this current transformative phase, he emphasizes the pressing need for infrastructure and economic expansion, thus positioning public investment as a crucial short-term driver.

However, excessive reliance on public spending comes with risks. Dr. Binh warns of a potential “crowding-out effect” that could discourage private sector investment. Moreover, increased public investment typically entails higher taxes or government borrowing, which could burden both businesses and citizens.

Ideally, Dr. Binh opines that private investment should gradually assume the lead role, particularly in infrastructure initiatives via public-private partnerships (PPPs). He asserts, “Public investment will remain an important driver, but it should evolve from leading to enabling, establishing momentum for private capital to shape Vietnam’s next growth phase.”

Turning Optimism into Action

With a forward-looking gaze toward 2026, there is an evident sense of cautious optimism among economists and investors alike. Dr. Tuan anticipates GDP growth between 8 and 10 percent, reflecting an ongoing recovery and sustained momentum. “Stay optimistic in spirit but calculated in action,” he advises succinctly.

Dr. Binh further notes that this positive sentiment from the business community is expected to translate into actionable steps—investment decisions, business expansions, and increased consumer spending. Encouragingly, 2025 may already witness a resurgence in both direct and portfolio investment flows following a challenging period of capital outflow.

Mr. Dray concurs with this optimistic trajectory, praising Vietnam’s proactive policy measures. He stresses the importance of ongoing vigilance concerning global risks, including geopolitical tensions and political instability, while underscoring diversification and increasing information transparency as essential tools for enhancing resilience.

As Vietnam gears up for 2026, the landscape is becoming more reflective of both the opportunities that await and the cautious strategies necessary to seize them.