Vietnam targets over 10% average GDP growth in 2026–2030, with 2026 as a pivotal year, but energy price shocks pose risks

The new government (2026-2031) formally began on April 8, 2026, with the key objective of pursuing average 5-year GDP growth of 10% or more for 2026-2030, with 2026 identified as the pivotal year. However, recent global economic developments are raising concerns that the macro policy challenges ahead are neither small nor straightforward, and that achieving the target could involve significant risks.

As conflict escalates in the Middle East, the Strait of Hormuz has faced disruption and energy facilities in the region have been attacked, pushing oil prices sharply higher and lifting energy prices broadly. Brent crude futures have moved above $100 per barrel, up more than 50% from three months earlier. Gasoline, diesel, and gas prices in many Asian and European countries have risen similarly or more.

Energy prices matter because they are key input costs across most goods and services. As a result, the article notes the widespread view that “there is petrol in every loaf of bread.”

Iran conflict and global inflation pressures

Compared with the energy-price shock from the Russia-Ukraine crisis, the shock linked to the Iran conflict is described as more severe. Many countries are increasing investment in strategic reserves or adjusting energy strategies, which can raise economic costs.

Rising oil prices and supply disruptions from the Middle East are also affecting global fertilizer and food markets. Since energy and food are major components in inflation baskets and account for a significant share of household spending, sharp and persistent increases can erode real purchasing power.

The article argues that when costs rise, prices often need to rise as well, increasing the likelihood of inflation. It highlights that gasoline pricing can be particularly persistent due to asymmetric price transmission. If the energy-price shock lasts, inflation persistence may be higher as households and firms adjust to the new price level.

OECD projections for inflation

A recent OECD report is cited to show that if energy prices rise and persist, the inflation impact across economies could be material. In the base scenario, where energy prices gradually fall, inflation in the G20 is projected at 4% in 2026 and 2.7% in 2027. In the pessimistic scenario, inflation could rise by up to 0.7 percentage points above the base case for the global economy.

Federal Reserve concerns and policy implications

Federal Reserve minutes from March 17-18, 2026 are cited as showing that many members were concerned about energy prices’ impact on inflation, making the 2% target harder to reach if inflation remains elevated. The article notes that while only a few members supported tighter policy in January 2026, a majority now favors potential rate increases.

Growth and employment risks

The article emphasizes that inflation is only the first channel of impact. It also points to effects on employment and growth: if price increases are sharp and prolonged, household spending could fall significantly, firms may reduce output, labor demand could slow or even decline, and overall growth could weaken.

According to OECD, global growth in 2026 is projected at 2.9%. In the bad scenario described, growth could be reduced by 0.3 percentage points in the first year and 0.5 percentage points in the second year.

The World Bank’s regional economic update for East Asia and the Pacific is also cited, showing growth slowing from 5% in 2025 to 4.2% in 2026. The article notes that these economies are highly dependent on energy imports and are sensitive to Middle East conflicts.

Vietnam is highlighted as among the most affected, with a 2026 growth forecast of 6.3% compared with more than 8% in 2025.

Vietnam’s 2026 growth target and near-term headwinds

In Q1 2026, Vietnam’s economy grew 7.83%. To reach a 10% growth target in 2026, the remaining quarters would need to average above 10%. The article argues that the Iran war and the energy crisis are creating headwinds for this goal.

With energy-price volatility, supply-chain disruptions, and inflationary pressures, the article states that it becomes difficult to achieve simultaneously objectives such as growth, macro stability, inflation control, large balances, and crisis management, requiring prioritization and trade-offs.

It also notes that the government’s messaging suggests two-digit growth remains the top priority. In that case, the main impetus would come from government spending—prioritizing disbursement of key projects, increasing budget revenue, and the State Bank of Vietnam (SBV) pushing for monetary loosening to support growth. Another potential driver mentioned is transfer payments.

Lessons from 2011 macro instability

The article recalls a lesson from Vietnam’s macro instability in 2011, when monetary loosening and credit stimulus were later tightened. It says misallocated capital, maturity mismatches, and ineffective public investment contributed to non-performing loans and systemic risk, with inflation spiking to 18-20% at times.

External forecasts and policy trade-offs

International observers are described as viewing Vietnam’s two-digit growth target as ambitious. The article cites IMF projections of about 5.6% growth, the World Bank about 6.3%, and a Bloomberg survey about 7.2%. One reason given is that Vietnam is said to overvalue its fundamentals while underestimating obstacles.

The article concludes that if Vietnam remains determined to achieve two-digit growth in 2026 by leveraging fiscal, monetary, and foreign-investment tools, it could be achievable. However, it stresses that careful consideration of the long-run costs to macro stability and inflation is warranted.

Given global uncertainty and rising risks such as private credit growth and AI bubbles, Vietnam is advised to prioritize macro stability and inflation control.

(*) Lecturer at IPAG Business School Paris, University of Economics Ho Chi Minh City; member of AVSE Global.