Highest Q1 growth on record despite global volatility and equity correction – March 2026

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Monthly Insights

Vietnam’s growth momentum strengthened in March following Lunar New Year normalisation, reinforcing confidence that the expansion remained firmly intact through Q1 2026. GDP grew 7.8% YoY in Q1, with industry and construction rising 8.9% and services 8.2%, highlighting that growth is not solely reliant on exports and manufacturing, but is increasingly supported by services and domestic demand. The confirmation of Vietnam’s leadership structure, with Tô Lâm as reaffirmed as General Secretary and President during the recent National Assembly session, reinforces political stability and policy continuity, providing investors with clearer economic visibility over the next five-year government cycle. Nonetheless, global markets turned more volatile following the escalating Iran conflict in early March, shaping near-term sentiment despite Vietnam’s stable macro fundamentals, placing downward pressure on the VN-Index.

Industrial activity remained a key pillar. The Index of Industrial Production (IIP) increased 9.0% YoY in Q1, with manufacturing expanding 9.7% and driving the majority of growth. March recorded a strong rebound, with IIP rising 18.8% MoM and 6.9% YoY. Business conditions remained expansionary, with PMI moderating to 51.2 from 54.3 in February, reflecting normalisation from a high base rather than weaker demand. Expansion remained broad-based across sectors, including metals (+22.9%), non-metallic minerals (+19.7%), chemicals (+18.2%).

Domestic demand remained firm. Retail sales and services revenue rose 12.1% YoY in March and 10.9% in Q1, reaching c.$72.3bn. Accommodation and food services increased 13.3% YoY, while tourism-related services grew 12.5%, supported by seasonal demand and continued recovery in travel activity. This trend supports earnings visibility for consumer-facing sectors, which have become an increasingly important driver of market performance in recent years, and reinforces consumption as a stable and increasingly important support to economic expansion.

Investment and external activity continued to underpin expansion. Goods exports rose 19.1% YoY in Q1, while imports increased 27.0%, reflecting strong trade demand. Business formation remained active, with over 57,000 new enterprises (+57.8% YoY) and registered capital of approximately $20.5bn. Including firms restarting operations, total active additions reached around 96,000 (+31.7%), highlighting continued private-sector dynamism.

CPI rose 4.6% YoY in March, the highest March reading in five years, bringing Q1 average inflation to 3.5% YoY, driven mainly by higher fuel prices amid US-Iran tensions. However, both remain within the government’s 4.5–5.0% target, preserving policy flexibility to absorb external shocks.

Equity markets turned more volatile in March, entering a corrective phase after the strong rally earlier in the year. The VN-Index declined 11.9% MoM in total return USD terms as global markets priced in geopolitical tensions. The correction was sector agnostic, suggesting a broad de-risking rather than specific weakness. Average daily trading value remained resilient at around $1.3bn, supported by domestic participation, while foreign flows remained intermittent. By month-end, the VN-Index stabilised from its lows, suggesting the adjustment was driven primarily by external factors rather than any change in domestic fundamentals.