HSBC characterizes Vietnam as one of Asia’s fastest-growing economies, supported by growing electronics exports and import-intensive manufacturing. However, the growing trade deficit and increased oil prices are reducing the current account surplus and pushing inflation above the State Bank of Vietnam’s limits. The bank has lowered its external surplus forecast and raised its 2026 inflation forecast.
Rapid expansion with external and price pressures
“Despite growth from 8% last year, the country saw a healthy growth of 7.8% in 1Q26. This helped Vietnam easily maintain its position as one of Asia’s fastest growing economies.”
“Nonetheless, a detailed look at trade data shows Vietnam’s trade resilience. Exports have increased by about 20% on average YTD due to rapidly growing electronics shipments.”
“Despite rapidly growing exports, Vietnam’s imports grew even more, rising 30% year-on-year. This is understandable to an extent, as Vietnam’s manufacturing sector is import-intensive.”
“From December 2025, Vietnam has been running a persistent trade deficit, which widened to a record high of USD5.2bn in May. We do not think Vietnam will enter a “double deficit” situation, as tourism receipts and secondary income will help.”
“Fast forward to today, Vietnam’s inflation rose sharply to 5.6% in May, exceeding the State Bank of Vietnam (SBV)’s 4.5% inflation threshold for the third consecutive month. While the significant jump in petrol prices was the main culprit, it is important not to ignore the recent rise in food prices.”
(This article was created with the help of an artificial intelligence tool and reviewed by an editor.)
