According to the report "Asia’s growth winner defies tariff saga" released by HSBC on January 13, the year 2025 can be characterised as a rollercoaster year. When the ‘liberation day’ announcement first hit in April, Vietnam was widely regarded as one of the economies most exposed to the tariff risks in Asia, probably next after only China.
However, Vietnam has defied the tariff typhoons and proved its economic resilience with remarkable GDP growth, hitting a high of 8 per cent for 2025, largely in line with HSBC’s expectation of 7.9 per cent. With the second-fastest growth in 15 years, this likely easily placed Vietnam as the growth champion, not only in ASEAN, but also in Asia, in 2025.
While 2025 was all about the on-and-off tariff shocks, Vietnam’s trade flourished to a record high of $928 billion, an 18 per cent year-on-year increase. "This could be attributed to the powerful impact of frontloading, but we think this is only part of the story," the report noted, adding that the frontloading impact to the US market has gradually faded, though in Vietnam’s case, export growth is still much stronger than others at a pace of 30 per cent year-on-year on a 3-month-moving-average (3mma) basis. But it’s not only about frontloading, it’s also about the significance of exporting the ‘right’ products.
There may have been too much news about AI, but it’s largely holding up global trade. Demand for AI-driven chips amid the escalation of the US-China chip race has reshaped the global semiconductor landscape Therefore, there’s no better time to export the electronics products as a way to shield from the tariff impact. Fortunately, Vietnam is in the league, though its exports are still concentrated in low-end consumer electronics. Vietnam’s electronics exports now account for 35 per cent of its total export basket, jumping from only 5 per cent in 2010. Meanwhile, its textiles and footwear exports fell from its peak of 30 per cent in 2005 to a little over 10 per cent now, reflecting Vietnam’s export journey up the value chain.
In addition to shipping the ‘right’ products, Vietnam has gained more share in the US market, which we discussed extensively in our note last month. Vietnam’s exports to the US jumped almost 30 per cent year-on-year in 2025, defying tariff concerns. Despite being subject to a headline tariff of 20 per cent, Vietnam has captured even more share in the US market in products such as phones, textiles and footwear.
Concerns about ASEAN’s rising imports from China, are not as simplistic as they may sound. The issue is not only how much ASEAN countries import from China, but also about how they can translate this into surging exports with cheaper inputs, and if they can reap the benefits in end-consumer markets like the US. Vietnam has set a good example of how to firmly grasp the ‘China+1’ opportunity to its benefit. While Vietnam’s trade deficit with China widened to $116 billion, its trade surplus with the rest of the world also widened, to $136 billion, resulting in a sizeable trade surplus of $20 billion.
Related to tariffs, the FDI performance is also worth flagging. While new registered FDI fell 12 per cent year-on-year in 2025, the absolute level remained high by historical standards. Beyond the headline number, the shift in investment composition is more interesting. The main culprit of lower investments is South Korean FDI, which plunged to a 14-year-low, despite being an early mover. However, Chinese FDI has partially picked up the slack, surging to the position of top investor with a share of 30 per cent, narrowly beating Singapore.
Despite defying the tariff challenges, risks remain, which may cloud Vietnam’s trade prospects.
Trade is strong, but it’s more than trade: Vietnam’s domestic resilience is also holding up. Private consumption grew 8 per cent on the back of a high base while investment accelerated to almost 9 per cent in 2025. The push for infrastructure development serves as a traditional playbook that Vietnam relies on.
On the tourism front, despite missing its earlier target, Vietnam has welcomed a record high number of over 21 million foreign tourists, generating tourism receipts worth $40 billion, equivalent to 7 per cent of GDP. Its tourism recovery has been strong, with tourist numbers almost at 120 per cent of 2019’s level. This is largely aided by a swift return of Chinese tourists, which is impressive considering that Vietnam does not have a visa-free scheme with mainland China.
Elsewhere, inflation remains in check. Headline inflation rose 0.2 per cent month-on-month (3.5 per cent year-on-year) in December, largely driven by a 1 per cent rise in foodstuff prices. This reflects the ongoing food supply disruptions due to earlier flooding, but the impact should not last. Overall, inflation remains largely benign at 3.3 per cent for 2025, in line with HSBC expectations. It benefits from low oil prices and stable food costs, though the latter saw some recent pickup in momentum.
"All in all, we expect GDP growth to hit 6.7 per cent in 2026 and inflation to remain benign at 3.5 per cent," the report noted.
Vietnam will start 2026 with a key political event. The 14th National Congress of the Communist Party of Vietnam (CPV), which is scheduled to take place from 19 to 25 January 2026. The National Congress, held every five years, will choose the country’s new leadership and set socioeconomic goals for the next five to ten years.
All eyes will be on who the next ‘five pillars’ will be, namely who will fill the top five positions: Party General Secretary, State President, Prime Minister (PM), Chair of the National Assembly and Standing member of the Party Central Committee's Secretariat. The last position was added to the top leadership lineup only last September, marking a shift from ‘four pillars’ to ‘five pillars’. Currently, To Lam holds the position of Party General Secretary, and Luong Cuong is the State President. Meanwhile, Pham Minh Chinh, Tran Thanh Man and Tran Cam Tu are the PM, National Assembly Chairman and Standing member of the Secretariat, respectively.
That said, regardless of the outcome of the leadership reshuffle, economic policy is widely expected to be consistent and unlikely to change significantly.
In each congress session, key economic goals, including GDP growth and GDP per capita for the next five years will be unveiled. Vietnam’s 2021-25 average GDP growth reached 6.2 per cent, missing its target of 6.5-7 per cent growth set in the 5-year socioeconomic development plan for the period, but this was due only to the slow growth in the pandemic-hit 2021. Over the medium term, Vietnam strives to become an upper-middle income country by 2030 and ultimately a high-income one by 2045.
In November 2025, a series of socioeconomic targets for 2026 were approved by the National Assembly, providing a sneak peak of what to expect for the 2026-30 period. The 2026 growth target is set at “at least 10 per cent” with a GDP per capita of $5,400-5,500. The double-digit growth target is on top of the high GDP growth of 8 per cent last year, requiring a hard push to achieve broad-based growth, encompassing trade outperformance, significant investments and strong consumption.
What reforms will be introduced to support growth are also key to watch. Vietnam has pushed for a series of reforms, with the reorganisation of state agencies and merging of provinces and cities being the main highlights for 2025, to reduce bureaucratic hurdles and streamline administrative processes.
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