The first half of 2026 - the initial year following the 14th National Party Congress and the opening year of what Vietnam has termed “the new era of the nation’s rise” - offered the first clear indication of the country’s economic trajectory and the outlook for GDP and other key indicators over the remainder of the year.
Achieving double-digit GDP growth remains one of the most ambitious objectives of Vietnam’s new development era. The economy’s first-half performance raises important questions about the drivers of growth, existing constraints, upcoming challenges, and the policy measures needed to sustain momentum.
GDP grew 8.18 per cent in the first half, surpassing the 7.63 per cent performance recorded in the same period of 2025 and marking the strongest first-half performance in many years. The result is particularly significant because it was achieved against an increasingly high comparison base built up over previous years. Growth also accelerated sequentially, with GDP rising 7.94 per cent in the first quarter and 8.39 per cent in the second quarter, continuing a pattern seen in previous years.
Growth drivers
The expansion was broad-based across both the production and expenditure sides of the economy. Gross capital formation - a key indicator of future investment - surged 15.2 per cent in constant prices, or nearly double the pace of GDP growth. At current prices, growth may have approached 20 per cent, despite total social investment increasing by only 12.9 per cent. On a constant-price basis, investment growth is estimated at below 8 per cent; substantially lower than both the increase in capital formation and overall GDP growth.
Total social investment accounted for only 27.3 per cent of GDP during the first half; well below the roughly 35 per cent recorded in previous years and far short of the government’s nearly 40 per cent target for 2026.
Despite the relatively low investment ratio, GDP growth remained robust. This may reflect two factors. First, investment efficiency appears to have improved. The investment coefficient for growth stood at only 3.34 (27.3 divided by 8.18); considerably lower than the typical level of around five in previous years and suggesting stronger capital productivity, though the magnitude of the improvement may not be as large as the calculation implies.
Second, capital may be shifting away from speculative assets toward productive activities. Domestic gold prices, which have climbed sharply since 2020, have been falling over the course of 2026 and are expected to decline further, prompting investors to reduce their own gold holdings.
Meanwhile, Vietnam’s property market, which entered an upcycle in mid-2022, has now been expanding for four years. Combined with tighter government management measures, investment inflows into real estate have slowed, while some investors have begun selling assets in anticipation of softer prices. At the same time, losses in cryptocurrency markets have discouraged many investors, prompting them to exit the sector. As a result, a significant amount of capital appears to have been redirected from speculative investment channels into manufacturing, business operations, and consumer goods and services.
One area requiring close attention is industrial efficiency. Value-added growth in industry remained below growth in industrial output. Overall industrial value-added increased 9.86 per cent compared to a 10.8 per cent rise in the Index of Industrial Production (IIP). Manufacturing recorded value-added growth of 10.23 per cent versus output growth of 10.4 per cent.
Based on first-half results, GDP growth is projected to reach around 8.7 per cent in the third quarter and approximately 9.5 per cent in the fourth quarter, bringing full-year growth to over 9 per cent; the strongest annual performance in many years. With more decisive policy measures, quarterly growth could accelerate further. Fourth-quarter growth may reach double digits, allowing full-year GDP expansion to exceed 9.5 per cent. Key policy priorities include raising total social investment to more than 35 per cent of GDP and reducing intermediate costs in the industrial sector.
International tourism also continued to recover strongly. Vietnam welcomed nearly 12.3 million foreign visitors in the first six months, almost matching the 12.6 million arrivals recorded during all of 2023. Full-year arrivals are expected to exceed 25 million. However, service export revenue totaled only $9 billion during the period; slightly below the $9.16 billion recorded in the corresponding period of 2023.
Labor productivity remains another important driver of economic growth. The government’s target is an 8.5 per cent increase for the year. With employment rising 1.32 per cent during the first half, labor productivity increased an estimated 6.77 per cent. Even if GDP expands by 9.5 per cent for the full year while employment growth remains at 1.32 per cent, labor productivity would increase by only about 8.07 per cent, or short of the official target.
Businesses continue to play a central role in growth. During the first half, 169,842 enterprises were newly-established or resumed operations, while 151,067 exited the market, resulting in a net increase of 18,775. The total number of active enterprises is estimated to have reached 1.047 million by mid-2026. This means Vietnam has finally surpassed the long-delayed milestone of 1 million active businesses; a target originally set for 2010. However, the subsequent targets of 1.5 million businesses by 2020 and 2 million by 2030 remain behind schedule.
Risks & outlook
If GDP was to expand 9.5 per cent in 2026, nominal GDP would be projected to increase by approximately 14.4 per cent, assuming average inflation of 4.5 per cent. Total GDP at current prices would reach roughly VND14,700 trillion.
Assuming the VND depreciates about 1.8 per cent against the USD for the year, the average exchange rate is estimated at VND25,426. Based on that, Vietnam’s GDP would exceed $578 billion, up 12.48 per cent from the $514 billion posted in 2025 and the highest level on record.
The average population is projected to rise 0.99 per cent to approximately 103.36 million people. GDP per capita would reach VND142.2 million (approximately $5,593), exceeding both 2025’s $5,026 and the government’s 2026 target of $5,400-5,500.
Gross national income (GNI) per capita is estimated at $5,410, further strengthening Vietnam’s position within the upper-middle-income country group after moving up from lower-middle-income status in 2025.
Though GDP growth in constant VND terms may broadly meet official targets, relatively stable exchange rates have pushed GDP per capita in USD terms above the target, improving Vietnam’s ranking within the region and globally. This underscores the importance of exchange rate stability. While the gap between purchasing power parity (PPP) and the market exchange rate has narrowed from more than five-times several decades ago to around 3.5-times today, the VND remains significantly undervalued compared to many other economies. A weaker currency supports exports, foreign investment, and international tourism, but also raises borrowing costs abroad and increases import prices.
After posting goods trade surpluses for ten consecutive years, Vietnam recorded a substantial trade deficit during the first half of 2026. The country’s trade surpluses over the past decade have not only been continuous but also sizable, exceeding $20 billion in several years, including more than $28.1 billion in 2023, over $24.9 billion in 2024, and nearly $20.1 billion in 2025.
Imports surged 33.4 per cent year-on-year in the first half, significantly outpacing export growth of 21 per cent and resulting in a trade deficit of $16.66 billion.
The number of export products generating more than $1 billion annually is also expected to decline or grow more slowly after reaching between 31 and 36 products during 2020-2025.
Among Vietnam’s 83 major trading partners, it recorded trade deficits with 29 in the first half, including several where it exceeded $1 billion. Though Vietnam still posted trade surpluses with 54 markets, including 12 with surpluses above $1 billion, its overall external trade position has shifted from surplus to a significant deficit.
The widening trade deficit is not only a key macro-economic imbalance but also has direct implications for the balance of payments. With foreign exchange reserves already relatively thin, continued trade deficits could place additional pressure on exchange rate stability and the foreign exchange market.
Given the exchange rate’s broad and complex influence across the economy, policymakers should proceed cautiously. Maintaining an undervalued VND over an extended period may have offered advantages during earlier stages of economic integration, but as Vietnam deepens its global financial integration and prepares to develop international financial centers, exchange-rate policy will require increasingly careful management.
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