Vietnamese authorities have maintained their policy interest rates since mid-2023 and appear to be in no rush to adjust them. Despite the US tariff roller coaster in 2025, Vietnam’s economy has largely held up in the first eight months of the year. Still-high US reciprocal tariffs of 20% have kicked in from August, higher than 10% during the 90-day pause but much lower than 46% threatened on Liberation Day. Policymakers are supporting GDP growth through a higher annual credit growth target above the initial 16% (the upwardly revised rate was undisclosed), as announced in late July, as well as state-related investments. We therefore delay our refinancing rate cut forecast of 50bps to 4.00% to 2026, keeping in mind ongoing tariff-related uncertainties, weaker external demand, and significant exposure to the US.
Vietnam’s economy appears to be weathering the US tariffs volatility decently in 2025, yet external challenges persist. Goods export growth registered a double-digit rate of 14.5% YoY in August, although this eased to the lowest since March. Shipments to America grew by 18% YoY, but front-loading has been fading, as this expansion reached its lowest since November 2024. By products, a divergence has emerged. Electronics exports remained robust, continuing to benefit from temporary US tariff exemptions, but ‘textiles, garments & footwear’ and ‘wood & wooden products’ contracted in August. Despite slower export growth, industrial production strengthened in August. Domestic indicators such as retail sales and public investments were robust in August, with the former accelerating to 10.6% YoY, and the latter expanding by 30+% YoY for the fourth consecutive month. Total registered foreign direct investments (FDI) were strong in the first eight months of 2025, although newly registered FDI were subdued as new investors have been cautious. Manageable inflation offers some room for lower policy rates, but there seems to be little urgency for cuts in the near term unless growth steps down sharply.
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