Vietnam’s Economic Outlook: Insights from the IMF Delegation

Vietnam’s economic landscape has been a point of discussion among global financial institutions, particularly highlighted in recent talks led by Paulo Medas from the International Monetary Fund (IMF). The discussions took place from June 11 to 24, 2025, with key meetings involving Deputy Prime Minister Ho Duc Phoc, senior officials from the State Bank of Vietnam (SBV), the Ministry of Finance (MOF), and various private sector stakeholders.

Economic Recovery and Positive Momentum

Vietnam’s economy demonstrated remarkable resilience, rebounding powerfully in 2024 with a growth rate of 7.1 percent. This revival can be attributed to robust exports, resilient foreign direct investment (FDI), and supportive governmental policies. Early indicators from the first quarter of 2025 showed that this positive growth momentum was not only sustained but also promising. Inflation remained controlled, and Vietnam celebrated a current account surplus that reached an impressive 6.6 percent of its GDP in 2024.

However, while the past year painted a picture of economic strength, the future remains uncertain. The country’s outlook hinges significantly on ongoing trade negotiations, with global uncertainties continuing to loom large over economic growth and policy.

Tariffs and Economic Forecasts

The IMF’s projections, rooted in their April 2025 World Economic Outlook, suggested that if new reciprocal tariffs go into effect in the third quarter, Vietnam’s growth could decelerate to merely 5.4 percent for 2025, with further declines expected into 2026. This trepidation is echoed by other financial institutions, such as Fitch Ratings, which anticipate a drop in Vietnam’s GDP growth due to these tariffs, predicting a fall from 7.1 percent in 2024 down to 5.6 percent in 2025 and tapering to 5.3 percent in 2026.

Bloomberg added another layer to this forecast, estimating that GDP might contract by about 8.9 percent by 2030, suggesting a continual decline of 1.5 to 2 percent annually. Aureus Sigma Capital weighed in with estimates of a GDP decline ranging from 1.4 to 2.0 percent in the first year, translating to a financial shortfall of approximately $6.7 to $9.5 billion.

Meanwhile, local forecasts also indicate a slowdown. VPBankS projected an average annual GDP growth reduction of 1.78 percent over the next five years, while BMI Research suggested growth could underperform by about 3 percent, aiming only for an approximate 4.4 percent compared to an earlier projection of 7.4 percent.

Growth Aspirations Amidst Uncertainty

In light of this challenging landscape, Vietnam aims to achieve growth rates of 8 percent or higher in 2025, positioning itself for a solid foundation for potential double-digit growth starting in 2026. Nguyen Quoc Viet, a lecturer at the University of Economics, pointed out that forecasts for Vietnam’s growth have slightly declined from 6.4 to around 6.26 percent since 2024.

He emphasized a trend with previous macroeconomic reports indicating that in favorable conditions, actual growth often exceeds generally cautious international forecasts. Conversely, adverse conditions can lead to a downturn of 0.8 to 1.5 percent below predicted rates.

Addressing Risks and Policy Recommendations

The uncertainties flagged by IMF’s Medas about potential downside risks, such as rising global trade tensions and tightened financial conditions, could negatively impact export and investment levels. Moreover, domestically, the risk of financial stress is heightened due to stringent financial circumstances and high corporate debt levels.

To stabilize the current situation, the IMF proposed enhancing fiscal policies, capitalizing on low public debt to mitigate short-term impacts, particularly in the face of economic downturns. Prioritizing acceleration in public investments and bolstering social safety nets are essential aspects that could provide critical support.

Monetary policy, while facing limitations, should concentrate on anchoring inflation expectations. A flexible exchange rate regime is deemed crucial for the national economy’s necessary adjustments to any external shocks. Some degree of monetary easing might be possible if global interest rates decrease as anticipated and inflation trends cool down.

Dr. Nguyen Quoc Viet raised concerns about the rapid growth of money supply and credit—growing at a rate of 13 to 15 percent annually—outpacing Vietnam’s real GDP growth of 10 to 11 percent. This imbalance could pose macroeconomic risks and restrict the government’s ability to respond effectively to evolving economic conditions. As of late May 2025, credit growth reached an outstanding high of 6.52 percent, contributing to about 130 percent of the GDP.

By taking a nuanced approach to macro-financial policies, Vietnam can better navigate the complex global landscape while positioning itself for future growth in a highly interconnected economy.