UOB Raises Vietnam’s GDP Growth Forecast for 2025 to 7.5%
Singapore’s United Overseas Bank (UOB) has recently revised its forecast for Vietnam’s GDP growth in 2025, increasing it from 6.9% to an optimistic 7.5%. This adjustment comes in light of stronger public investment that has propelled the economy forward.
Recent Economic Performance
The Vietnamese economy posted a remarkable 7.5% growth rate in the first half of 2025, although it still fell short of the government’s ambitious target of 8.3%–8.5%. The second quarter saw a year-on-year GDP increase of 7.96%, outpacing initial projections. This growth marks the highest first-half rate since 2011, and it is largely attributed to a significant 14% rise in exports.
Factors Behind Strong Export Performance
A revitalization in market sentiment has played a vital role in this momentum. The positive atmosphere was, in part, enhanced when former US President Donald Trump temporarily reduced the “reciprocal” tariff rate to 10% for a period of 90 days. Trade tensions further eased in the latter half of 2025 after the US implemented country-specific tariffs, establishing Vietnam’s rate at 20%.
Resilience in the Face of Challenges
Despite the shifting landscape of tariff policies, UOB analysts highlighted Vietnam’s resilience and dynamism. Export performance has remained robust, though potential risks loom if demand from the US weakens due to ongoing tariff pressures. However, the outlook remains encouraging, as the economy has demonstrated adaptability.
Future Growth Projections
Suan Teck Kin, Head of Research and Global Economics at UOB, remarked that maintaining an annual growth rate of approximately 7% between 2026 and 2045 is attainable for Vietnam. He emphasized that achieving this would require ongoing reforms and a commitment to openness alongside support for investment and trade.
Importance of Structural Reforms
Kin underscored that Vietnam’s aspiration to transition into a high-income economy by 2045 necessitates consistent reforms. Recent government initiatives, such as streamlining administrative processes, consolidating provinces, and empowering the private sector, have been steps in the right direction. The Politburo’s Resolution 68 on private sector development is particularly noteworthy for promoting domestic enterprises and fostering “national champions.”
Inflation and Monetary Policy
On the inflation front, the country’s inflation rate has shown no clear downward trend, with cumulative headline inflation at 3.3% as of July, slightly above the averages of previous years. Given this positive economic forecast for the latter half of 2025, UOB anticipates that the State Bank of Vietnam (SBV) will maintain the refinancing rate at 4.5%, thus limiting any potential monetary easing.
Global Context and Local Rates
The broader global landscape remains uncertain as central banks worldwide have been slashing interest rates to stimulate growth amidst ongoing inflationary pressures. Dinh Duc Quang, Head of Global Markets at UOB Vietnam, pointed out that Vietnam’s macroeconomic situation remains stable, characterized by high growth rates, manageable inflation, steady interest rates, and a limited exchange rate fluctuation of around 4% in 2025.
Credit Growth Expectations
UOB forecasts a credit growth rate of 19%–20% for 2025, contingent on the current interest rate environment. Deposit rates for the dong are hovering around 5%, with short-term lending rates between 6%–7% and medium- to long-term lending at 8%–9%. This indicates a healthy financial sector ready to support economic activities moving forward.
Future Policy Directions
In light of potential rate cuts by the US Federal Reserve—projected to reduce the federal funds rate by 0.5% to 0.75% by the end of 2025—UOB expects the SBV may consider trimming dong rates by 0.25% to 0.5% in order to sustain economic momentum into 2026. The focus remains steadfastly on fostering growth while navigating the global economic complexities.
This forecast paints a picture of optimism for Vietnam, driven by strategic reforms and bolstered by a dynamic export market. As the nation positions itself for future challenges and opportunities, its commitment to sustainable growth will serve as a cornerstone of its economic strategy.