HSBC presents Vietnam as one of the fastest growing economies in Asia, supported by dynamically growing electronics exports and import-intensive production. However, a widening trade deficit and elevated oil prices are eroding the current account surplus and pushing inflation above the ceiling set by the State Bank of Vietnam. The bank lowers the external surplus forecast and raises the inflation projection for 2026.
Rapid expansion under external and price pressure
“Despite a slowdown from last year’s 8%, the country recorded quite decent growth of 7.8% y/y in the first quarter of 2026. This easily allowed Vietnam to maintain its position as one of Asia’s fast-growing economies.”
“Nonetheless, a detailed look at trade data shows Vietnam’s resilience to trade. Exports have increased by an average of almost 20% year-on-year year-to-date, driven by rising electronics supplies.”
“Despite booming exports, Vietnam’s imports have increased even more, reaching 30% year-on-year YTD. This is also understandable to some extent as Vietnam’s manufacturing sector is rather import-intensive.”
“Since December 2025, Vietnam has consistently maintained a trade deficit, which rose to a record high of $5.2 billion in May. We do not believe Vietnam will enter a ‘twin deficit’ situation as tourism receipts and secondary revenues will help.”
“Fast forward to today. Inflation in Vietnam rose sharply to 5.6% in May, exceeding the State Bank of Vietnam’s (SBV) inflation ceiling of 4.5% for the third month in a row. While the main culprit was the significant increase in gasoline prices, it is important not to ignore the recent increase in food prices.”
(This article was created with the support of an artificial intelligence tool and has been reviewed by an editor.)
