Vietnam to Raise 2025 GDP Growth Target to 8% Amid Global Trade Risks and U.S. Tariffs

Vietnam is set to revise its 2025 GDP growth target upwards, now aiming for at least 8% compared to the previous target range of 6.5%-7.0%. Minister of Planning and Investment Nguyen Chi Dung made this announcement on February 12, highlighting stronger industrial manufacturing as the primary driver for the revised forecast. Despite these optimistic projections, the country is grappling with the challenges posed by intensifying global trade disputes, particularly with the United States. These trade tensions, including the imposition of new tariffs on Vietnam’s steel exports, are expected to impact the nation’s export-driven economy.

The Vietnamese economy has long been heavily reliant on exports, and while Dung projected that both imports and exports would grow by 12% this year, he acknowledged the significant risks posed by external factors. The trade surplus is anticipated to be around $30 billion for 2025, though the ongoing global trade issues, especially with the U.S., could present considerable obstacles. These risks come in the wake of Vietnam’s record trade surplus of over $123 billion with the U.S. last year, which has made it a target for potential tariff increases.

ANZ Research has noted that Vietnam is particularly vulnerable to a broader range of U.S. tariffs, given its large trade surplus with the U.S. and its prominence as a contributor to the American trade deficit. Analysts caution that the changing global economic environment, marked by weak demand in China and a robust U.S. economy, is likely to alter export dynamics for many Asian economies, with Vietnam being one of the most exposed to the risk of higher tariffs.

Vietnam’s economic growth last year was one of the highest in Asia, at 7.09%, and it is aiming to sustain this momentum in 2025. Dung emphasized that industrial manufacturing and foreign investment would lead the economic growth this year, with the industrial production and construction sectors expected to grow by 9.5%. He also projected foreign investment inflows to reach $28 billion, along with a 12% increase in domestic retail sales. The government remains focused on maintaining macroeconomic stability and keeping inflation under control, which is expected to range between 4.5% and 5.0% for the year.

The revised GDP growth target will require approval from the Vietnamese parliament, which began its week-long session on February 12. Dung also noted that the central bank was in no rush to cut interest rates, given the overall strength of the economy. While challenges loom, the government is determined to push forward with economic growth and stability in the face of global uncertainties.

SOURCE: Reuters