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MACRO UPDATE FEBRUARY 2026: RIDE THE TAILWIND, STAY AGILE IN THE HEADWIND

Industrial production maintained a positive underlying trend after adjusting for seasonal distortions related to the Lunar New Year holiday. In February 2026, the Index of Industrial Production (IIP) declined 18.4% MoM due to fewer working days, but still rose 1.0% YoY, indicating that manufacturing activity and external demand continued to recover. In 2M2026, IIP expanded 10.4% YoY, above 7.5% in the same period last year, suggesting that the recovery has become more broad-based, with manufacturing remaining the key growth driver. In the same direction, PMI increased to 54.3 in February and stayed above the 50 threshold for the eighth consecutive month, with output, new orders, employment and input purchases all improving, reinforcing the near-term expansion outlook for the manufacturing sector.
Total retail sales of goods and consumer service revenue reached VND 1,236.6tn in 2M2026, up 7.9% YoY. Excluding price effects, real growth was only 4.5%, suggesting that domestic demand continued to improve, but household purchasing power has yet to accelerate meaningfully as it remains constrained by the price level and cautious spending behavior.
Inflation, overall, remains within a manageable range, although price pressures should not be overlooked. CPI in February 2026 rose 1.14% MoM and 3.35% YoY. Average CPI in 2M2026 increased 2.94%, while average core inflation rose 3.47%. This suggests that policy room for monetary easing is not particularly ample should additional input-cost shocks emerge, especially from energy.
FDI disbursement reached USD 3.21bn in 2M2026, up 8.8% YoY, indicating that capital deployment for existing projects remained on a solid footing. Meanwhile, public investment disbursement totaled only VND 55,739.8bn, equivalent to 5.6% of the full-year plan, suggesting that the public sector has yet to provide a sufficiently strong boost to aggregate demand in 1Q2026.
Vietnam’s trade activity in February 2026 remained on a constructive footing despite seasonal disruptions from the Lunar New Year holiday: exports rose 5.7% YoY, imports increased 4.4% YoY, while the sharp month-on-month decline mainly reflected temporary disruptions to production and logistics. The trade deficit remained at USD 1.04bn, but the FDI sector continued to serve as a key buffer, offsetting most of the domestic sector’s trade shortfall. Looking ahead, the US shift from the IEEPA tariff mechanism to Section 122 helps reduce near-term tariff pressure and somewhat improves the order outlook for Vietnam. However, trade risks have not fully dissipated, as the US is simultaneously re-establishing an investigative framework under Section 301, implying that uncertainty could persist through 2026. As such, Vietnam’s trade sector still has room to sustain growth, but the medium-term outlook will depend more heavily on the country’s ability to raise localization rates, improve origin transparency, and diversify export markets.