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MACRO UPDATE MAY 2025: SENTIMENT SHOWS SHORT-TERM IMPROVEMENT

In the context of lingering uncertainty over tariff negotiations, Vietnam’s manufacturing PMI has shown early signs of a more pessimistic outlook for future orders.
In the short term, most manufacturing firms are seeking to capitalize on the 90-day tariff suspension window to accelerate production and exports. As such, growth data for the manufacturing and export sectors in April 2025—and potentially throughout Q2—are unlikely to fully reflect the impact of upcoming trade policies.
Vietnam’s April 2025 trade performance with its two major partners—the US and China—could pose headwinds to negotiation momentum, even though current short-term figures largely capture front-loaded export orders during the temporary tariff suspension period.
Domestic consumption and foreign direct investment remained relatively resilient in April. Consumer demand was underpinned by the continued strength of the services sector, while FDI disbursement posted only a mild decline from the previous month and remained solid on a year-on-year basis.
Public investment accelerated in April 2025 but remained below expectations. Amid rising concerns about the potential drag on manufacturing and export-led growth from trade policy, the Government has intensified its push for public capital disbursement. Notably, there are increasing signs of openness toward public-private partnerships in key infrastructure development projects.
Resolution No. 68 on private sector development has delivered a modest sentiment boost, reinforcing domestic economic momentum.
Initial signals from bilateral tariff negotiations—particularly between the US and UK, and the early rounds of US–China talks—suggest a potential de-escalation in trade tensions, which may gradually ease policy uncertainty and mitigate downside risks stemming from tariff shocks.