DC Insights
Vietnam enters 2026 with accelerating 8.0% GDP growth, a 38.8% US$ VN‑Index surge, and a resilient PMI of 53.0 – all raising the question of whether this momentum can sustain stronger conviction ahead.
Macroeconomics:
- GDP growth closed 2025 at +8.0%, with Q4 at +8.5%, the second strongest annual GDP growth in 15 years.
- Domestic demand and services strengthened, retail and services were up 9.2%, and tourism hit a record 21.2 million arrivals, supporting a broader 2026 growth base.
- Policy room is intact with 2025 CPI at 3.3%, and state budget revenue at 134.7% of target. Public investment rose 26.6% YoY to $32.3bn, alongside $27.6bn of FDI disbursement, up 9.0% YoY.
Stock Market:
- The VNI posted its strongest year since 2017, ending 2025 38.8% up in total return US$ terms, despite combined net foreign outflows of $5.2bn over the year.
- The rally was domestically led, with average daily turnover reaching a combined $1.1bn, helping to absorb the foreign selling and support record highs.
- December’s $90.5mn foreign inflow is an encouraging sign ahead of the likely FTSE EM inclusion, although it is too early to judge whether this marks a sustained shift.
Chart of the Month
Monthly Insights: Earnings strength meets market consolidation
Vietnam ended 2025 with a clear acceleration in activity. Full-year GDP growth reached 8.0%, the second-highest since 2011, and momentum strengthened into year-end with Q4 growth of 8.5%, the strongest Q4 in 15 years. Nominal GDP rose to $514bn, up $38bn from 2024, lifting per-capita income above $5,000.
Notably, this expansion was broad-based and led by industrial activities. Manufacturing value added grew 10.0%, the fastest since 2019, while the Industrial Production Index (IIP) rose 9.2%, also the strongest since 2019. The Purchasing Managers’ Index (PMI) eased slightly to 53.0 in December but extended the positive run to six consecutive months, with business confidence at a 21-month high. Domestic demand also strengthened, with retail sales and service revenues up 9.2% in nominal terms, led by accommodation and food services at 14.6%, alongside record international arrivals of 21.2 million, the first time Vietnam has exceeded 20 million.
Policy room remained supported by stable inflation and strong fiscal performance. Headline and core inflation averaged 3.3% and 3.2% in 2025, both well within the 4.5% ceiling, while unemployment remained low at 2.2%. State budget revenue reached 134.7% of the government’s target, allowing public investment disbursement to rise sharply into year-end, reaching $32.3bn. In parallel, FDI disbursement rose to $27.6bn, a five-year high and up 9.0% YoY, while registered FDI held steady at $38.4bn. On the external side, trade also hit a new milestone with turnover at $930bn, up 18.2% YoY. Exports rose 17.0% to $475.0bn, supported by a 48.4% jump in electronics and computer products, while imports rose 19.4% to $455.0bn, leaving a trade surplus of $20.0bn.
Equity markets reflected this stronger macro backdrop, with the VNI reaching an all-time high of 1,805 on 25 December and ending the year at 1,784, up 5.9% MoM and 38.8% for 2025 in US$ terms, the strongest annual performance since 2017. Domestic participation remained the primary driver, absorbing sizeable foreign selling.
Foreign investors recorded net outflows of about $5.2bn in 2025, the largest annual sell-off on record, although December saw a meaningful shift, with foreign investors net buyers in more than half of trading sessions, resulting in a net inflow of $90.5mn for the month. While it is too early to draw firm conclusions, the change in tone is consistent with improving sentiment ahead of Vietnam’s likely FTSE Emerging Market inclusion in September, and continued regulatory reforms aimed at an MSCI upgrade by 2030.
Looking to 2026, the key question for investors is whether this broader growth base can be sustained. The combination of accelerating manufacturing, strengthening consumption, record tourism and firm investment flows provides a constructive starting point for earnings and market confidence. Over the next three to six months, the durability of export momentum, the pace of reform implementation, and FX movements will be the key swing factors to watch.
In addition, the recent Resolution 79 on developing the state economic sector is expected to support more productive use of public resources by improving the efficiency and accountability of state capital allocation, and strengthening SOEs’ role in strategic investment. Together, these measures can add further to an already strong growth foundation.
Read more about our previous monthly report Vietnam Market Insights – November 2025 here.
