Investments

What Drives the 2026 Growth Objectives?

The National Assembly has approved an ambitious economic growth plan for 2026, targeting a record-breaking increase of 10% or higher. What are the key drivers that will propel this unprecedented growth?

Administrator

20 November, 2025

The Driving Forces of 2025

Vietnam is poised to achieve its 8% GDP growth target for this year, provided that Q4 growth exceeds 8.4%. In Q3, GDP grew by 8.2%, bringing the nine-month growth rate to 7.85%. Historically, GDP growth is strongest in the final quarter due to seasonal factors, making it plausible to surpass the 8% target. This would mark the second-highest growth rate since 1996, following the 8.5% growth in 2022.

However, while the 2022 growth was largely due to the low base effect of 2021 (impacted by the COVID-19 pandemic), the 2025 growth reflects a more robust economic recovery. Key growth drivers have rebounded strongly, fueling genuine economic activity.

First, trade activity has been a significant contributor. In the first ten months, total trade reached over $762.4 billion, up 17.4% year-on-year, with exports rising 16.2% and imports 18.6%. This resulted in a trade surplus of $19.56 billion. This is notable despite the 20% countervailing duty imposed by the U.S. since August 7, which analysts believe has had minimal impact on exports and foreign investment in 2025.

Second, accommodative monetary policy has played a crucial role. Credit growth reached 15% by October, driven by strong trade activity and export demand. The trade surplus has helped stabilize exchange rates, control inflation, and maintain low interest rates, supporting business expansion.

Notably, broader access to credit at stable interest rates has enabled domestic businesses to invest in production. Industrial output grew by 9.2% year-on-year, with manufacturing up 10.5%.

Business confidence is evident in the 26.5% increase in new business registrations and reactivations, totaling 255,900 in the first ten months of 2025, compared to 190,600 closures, up 10.1% year-on-year.

The 10% growth target for 2026 is considered “challenging.” Photo: TL

Looking Ahead to 2026

The ambitious 10% growth target for 2026 faces global trade and investment uncertainties, geopolitical tensions, and policy risks. Vietnam has never achieved double-digit GDP growth since its economic reforms.

Domestic consumption is expected to drive 2026 growth, particularly in the private sector and households. New stimulus packages are anticipated to boost domestic demand, shifting the growth model toward consumption and reducing reliance on exports amid global volatility.

Recent policies aim to stimulate domestic demand. On October 17, the National Assembly raised the personal income tax deduction to VND 15.5 million/month, with dependent deductions increasing to VND 6.2 million/month, effective from 2026. The VAT reduction from 10% to 8%, implemented in July 2025, will continue through 2026.

Fiscal expansion includes increased public investment in infrastructure. Key projects like Long Thanh International Airport and associated road and rail networks are expected to drive growth. Major initiatives in transportation, energy, and infrastructure, such as the Ninh Thuan Nuclear Power Plant and the Lao Cai-Hanoi-Haiphong railway, will commence in 2026, with public investment projected at VND 8,500 trillion for 2026-2030, up from VND 2,870 trillion in 2021-2025.

Private investment is also expected to grow, supported by Resolution 57-NQ/TW, which focuses on technology, innovation, and digital transformation, and Resolution 68, which positions private enterprises as key drivers of economic growth.

Monetary policy will remain accommodative, with credit growth targeted at 20% to support economic expansion. Formalizing the informal economy will further boost private sector growth and GDP.

Tuệ Nhiên

– 13:00 20/11/2025