United Overseas Bank (UOB) has revised its GDP growth forecast for Vietnam in 2025 to 7%, asserting that the government's target of at least 8% is ambitious yet achievable. 

In a recently released report, UOB has raised its GDP growth forecast for Vietnam this year to 7%, up from the previous estimate of 6.6%. This decision follows Vietnam's economic growth of 7.09% last year, above both the government target of 6.5% and the general market prediction of 6.7%.

These factors, combined with the external situation, are being viewed more favorably. UOB anticipates that the government of the U.S., Vietnam's largest export market, will implement additional tariff policies in a more thoughtful and flexible manner.

In 2025, the National Assembly aims for a growth rate of 6.5% to 7%, while the government projects at least 8% or even 10% under favorable conditions, facilitating a double-digit growth in the following years, with the goal of achieving high-income status by 2045.

According to the bank from Singapore, based on a disciplined financial approach and the manner in which public investment has been disbursed to date, the target of 8% appears to be quite ambitious, yet there remains potential to achieve it.

Regarding the challenges, UOB believes that uncertainties surrounding trade prospects will pose a significant risk to Vietnam in the second half of the year. This is primarily due to the economy's increasing reliance on exports, which in 2024 reached a record high of over USD 400 billion and are getting close to the nominal GDP size of USD 450 billion.

The exchange rate is still under pressure.  In the first half of the year, the USD is anticipated to gain further strength, especially after Donald Trump's return.  In light of the ongoing consolidation of the USD's dominance, international markets have adjusted their expectations to anticipate fewer interest rate cuts from the Federal Reserve.

Meanwhile, Trump's trade policies, the Chinese Yuan's trend, and the Federal Reserve's interest rate policy are expected to have an impact on the Vietnamese Dong (VND).  UOB forecasts the USD/VND exchange rate to be 25,800 dong in the first quarter, 26,000 in the second quarter, 26,200 in the third quarter, and 26,000 in the final three months of the year.

Amidst the uncertainty surrounding the Federal Reserve's interest rate adjustment cycle and geopolitical as well as trade tensions, banking institutions anticipate that the State Bank will maintain its policy interest rate at 4.5%.

Kylie Nguyen