FREE

ECONOMIC ACTIVITY IMPROVEMENT DOES NOT MEET EXPECTATIONS

Manufacturing activity declined in the first 2 months of 2025 as indicated by the PMI measure but recovered slightly based on the increase in the industrial production index. The growth of electricity production did not correspond to the growth of the manufacturing industry.
Service retail growth showed a more positive trend than goods retail; inflationary pressure remained under control.
Although the statistical indicators in the first 2 months of 2025 improved compared to the same period, they still did not meet the expectation of the 8% GDP growth target.
Economic growth in Q1/2025 still benefits from the low base of the same period, and the improvement in economic activities in March will help Q1 growth reach about 7.3-7.5%, lower than the target of 7.7%. However, we believe that it will be quite challenging to achieve a growth rate of 8.0-8.2% in the following quarters.
The US remains Vietnam's strongest growth market in 2M2025 and imports at US ports are expected to continue to grow until June 2025. Vietnam aims to balance trade to avoid policy risks in the face of increased pressure from the US.
Existing FDI enterprises are expanding investment, while disbursement of public investment capital is still slower than required. The adjusted registered capital increased by USD4.2 billion, 6 times higher than the same period. China leads in the number of projects and registered capital (~USD679.9 million, accounting for 31% of total newly registered capital). According to the GSO’s estimate, disbursement of state budget capital increased by 21.7% over the same period, but only reached 8.5% of the annual plan, showing that progress is still slow compared to requirements.
The SBV is ready to supplement liquidity for the system, control fluctuations in interest rates and exchange rates positively in the first two months.