Economic growth in Ho Chi Minh City hits a five-year high.

Ho Chi Minh City’s economy in the first quarter of 2026 grew 8.27% year-on-year, the highest rate in the last five years. The result indicates the city’s recovery remains on a positive trajectory and provides a base for faster growth in subsequent quarters.

Services lead growth

In terms of economic structure, the service sector continued to be the main driver, rising 8.91% and contributing 56% to GRDP growth. Within services, transport and warehousing increased 12.18%, the fastest growth among service subsectors, highlighting the expanding role of logistics in moving goods and improving operational efficiency.

The trade sector grew 8.85%, reflecting continued expansion in aggregate demand. However, the growth rate was lower than the overall service sector, suggesting domestic consumption is slowing and nearing saturation. Financial activities rose 8.26%, indicating improved capital absorption capacity, though credit growth remains below the national average.

Industry–construction growth remains moderate

Growth in the industrial–construction sector reached 7.73%, contributing 32.6% to GRDP growth, with the sector still not meeting expectations. Industry rose 7.71%, while processing and manufacturing increased 8.46%, remaining the key contributor.

The industrial production index (IIP) rose 11%, and four major industrial sectors grew 13.6%. The chemical–pharmaceutical sector recorded strong growth. Despite these gains, industrial expansion was constrained by electricity production and distribution increasing only 3.08%, attributed to reduced thermal power output, along with mining activity rising slowly due to limited crude oil and gas output.

Investment and business formation support momentum

Investment activity remained a bright spot. Total social investment in Q1 2026 was estimated at 141,781 billion dong, up 10.7% year-on-year. Public investment disbursement accelerated, but the disbursement rate was about 10.5% of the annual plan, leaving room for further acceleration in the coming quarters.

The business environment stayed positive, with more than 13,600 new enterprises established, alongside strong growth in both the number of firms and registered capital. Foreign direct investment (FDI) attracted nearly 2.9 billion USD, up 219.7% year-on-year, signaling improving investor confidence.

Rising costs and prices weigh on firms

Cost and price pressures continued to build. The consumer price index (CPI) in Q1 2026 rose 3.36%. The industrial producer price index also increased due to higher input material costs. The service price index rose sharply, particularly in transport and warehousing, reflecting direct impacts from logistics costs and energy prices.

These pressures are weighing on production and business operations, especially in processing and manufacturing. Survey results show 31.6% of firms reported more difficult business conditions than in the previous quarter.

Drivers and constraints identified by the Statistics Office

According to the Ho Chi Minh City Statistics Office, Q1 2026 growth was shaped by both external and internal factors. Global economic fluctuations increased production and logistics costs, while the city’s openness makes it more directly affected by international trade conditions and energy prices. Internally, bottlenecks include slower public investment disbursement, credit not yet broadening, and signs of slowing domestic demand.

Outlook for Q2 and policy recommendations

To sustain and strengthen the recovery in Q2 2026, the Statistics Office recommends closely monitoring energy price developments domestically and internationally to adjust policies in a timely manner, support businesses, and stabilize residents’ livelihoods. It also calls for measures to stimulate domestic consumption and improve the effectiveness of promotional programs and trade-service activities to expand aggregate demand.

Accelerating the implementation and disbursement of public investment—especially key infrastructure projects—was highlighted as crucial for creating spillover effects and boosting growth. The office also emphasized applying digital technologies, raising labor productivity, and developing an innovation ecosystem to improve growth quality and the economy’s adaptability, alongside continued efforts to improve the business investment climate and support small and medium-sized enterprises.

At the end of the quarter, firms’ expectations for Q2 2026 were more positive: 43.5% forecast favorable conditions, while the share expecting difficulties fell to 22.9%. Sectors expected to improve include food processing, textiles, apparel manufacturing, electronics, and electrical equipment.