UOB has notably revised its 2025 GDP growth forecast for Vietnam to 6.9%, up from 6% previously, attributing the optimistic outlook to an early acceleration in exports and a robust economic recovery in Q2.

Citigroup followed suit, elevating its forecast from 6.6% to 7%. Even more bullish, Maybank projects an impressive 7.3% growth for 2025, although they also anticipate a potential moderation in exports and manufacturing during the latter half of the year. What’s driving this significant shift in perspective?

The most crucial factor behind this impressive recovery is Vietnam’s actual GDP growth rate in Q2 2025, which hit a remarkable 7.96% year-on-year. This figure significantly surpassed all prior forecasts, including Bloomberg’s (6.85%) and even UOB’s (6.1% for Q2). Consequently, Vietnam’s economic growth in the first half of 2025 reached 7.52%, marking the strongest increase since 2011.

According to UOB’s analysis, this strong growth momentum primarily stems from Vietnamese businesses capitalizing on a 90-day window during which U.S. President Donald Trump temporarily suspended “reciprocal” tariffs, instead applying a baseline 10% duty. This move is viewed as a strategic maneuver by businesses to circumvent the risk of higher tariffs, triggering an export “sprint.”

In the first half of 2025, Vietnam’s export turnover surged by 14.4% year-on-year to $219 billion. Imports also saw strong growth, increasing by 17.9% to $212 billion. Notably, computers and electronic products remained the largest export group, soaring by 42% year-on-year to $47.7 billion. However, a substantial reliance on three main product categories (computers, phones, and machinery and equipment), which account for approximately 46% of total export turnover, remains a point of concern.

Lingering Concerns Amidst Optimism

Beyond exports, FDI is another bright spot, with Maybank anticipating continued strong inflows. In the first half of 2025, Vietnam attracted approximately $11.7 billion in disbursed FDI, an 8.1% increase year-on-year and the highest figure for a first half since 2021. While the overall FDI attraction target for 2025 might face challenges due to global trade tensions, this stable growth underscores Vietnam’s attractiveness to international investors.

Furthermore, VinaCapital’s experts, led by Michael Kokalari, expressed optimism based on the positive impact of ongoing deep reforms. The synergy between administrative mergers, regulatory easing, and a focus on comprehensive economic development is actively driving infrastructure investment disbursement, a key catalyst for GDP growth. National-scale projects like Long Thanh Airport ($13 billion), Hanoi and HCMC Ring Roads ($13 billion), and the Lao Cai-Hanoi-Hai Phong railway line ($8.4 billion) have all seen expedited commencement and completion timelines, promising a significant boost to the economy.

However, the picture is not entirely rosy. Data from Vietnam’s Purchasing Managers’ Index (PMI) indicates that the manufacturing sector has not yet truly returned to a growth rhythm. Over the past seven months, the PMI has dipped below 50 six times, reflecting persistent difficulties in the manufacturing sector, particularly due to a decline in new orders.

UOB also forecasts that Vietnam’s export growth rate will likely increase by only 8.5% in 2025, significantly lower than the previous year’s 14%, suggesting that the “most intense period” has passed and export activities will return to more moderate growth levels.

Undoubtedly, Vietnam’s economic breakthrough in the first half of 2025 is noteworthy, especially given the impressive GDP growth figures and the optimism from international financial institutions. However, the fact that a significant portion of this momentum originated from a “one-off” factor like the export “race” to avoid U.S. tariffs raises questions about its sustainability.

Overall, despite facing internal challenges and global volatility, Vietnam continues to demonstrate remarkable resilience and strong growth potential. The critical task now is to transform these temporary “boosts” into sustainable drivers by addressing structural issues within the manufacturing sector and continuously improving the investment environment.