Vietnamese economy grows 7.83% in Q1 as it eyes a two-digit growth target

Vietnam’s economy expanded 7.83% in the first quarter of 2026, a notable bright spot amid global uncertainty, but still short of the country’s two-digit growth target. Policymakers and economists pointed to external risks—including the Middle East conflict, oil-price volatility, inflationary pressures and broader global instability—that could transmit quickly into Vietnam’s open economy through import prices, input costs and global demand.

Q1 performance: trade, investment and production

Despite difficult conditions in major markets, Vietnam’s goods exports continued to grow strongly. Export value reached 122.9 billion USD, up 19.1% year-on-year.

Foreign direct investment (FDI) also remained robust. In Q1, FDI reached 15.2 billion USD, up 42.9% year-on-year. Newly registered FDI capital totaled 10.23 billion USD across 904 licensed projects, up 2.4 times in registered capital and up 6.4% year-on-year in the number of projects.

Industrial production rose 9%, the highest pace in seven years. In the first three months, 96 thousand enterprises were established or resumed operations, while withdrawals approached 91.8 thousand enterprises.

Inflation: March price rise and cost pressures

Inflation pressures persisted. The consumer price index (CPI) in March increased by 1.23% month-on-month, driven by domestic gasoline price adjustments linked to world fuel prices, as well as higher construction materials costs reflecting input and transport costs.

Compared with December 2025, CPI in March rose 2.44%. On a year-on-year basis, CPI rose 4.65%, the highest March increase versus the same period in the last five years. The quarterly average CPI rose 3.51%.

Cause and development: external shocks and domestic constraints

Economist Nguyen Bich Lam said the global economy has not stabilized after the cycle of monetary tightening and faces a new shock from the Middle East conflict. For an open economy like Vietnam, such shocks can transmit rapidly into domestic conditions through import prices, input costs and global demand. External volatility can raise costs and weaken two key growth drivers: exports and consumption.

He also highlighted a mixed Q1 picture: positives included continued growth in production, investment and trade, more firms entering the market, and sustained FDI inflows. Risks included rising costs and inflation pressures, slow recovery in domestic demand, the reappearance of import surpluses, growing dependence on the FDI sector, and weaker spillover effects from public investment.

Official assessment: Q1 growth below the target

Nguyen Thi Mai Hanh, Head of the National Accounts Unit at the National Statistics Office under the Ministry of Finance, said Q1 showed fairly positive GDP growth and was a bright spot on the global growth map, but it still did not meet the 9.1% target. Growth in the industrial and construction sectors and services did not reach plan targets.

According to Ms. Hanh, the shortfall reflected both external pressures and limited domestic absorptive capacity. New trade barriers and fluctuations in exchange rates and global interest rates pushed up input costs, narrowing exporters’ margins. She added that the private sector had not yet absorbed capital effectively, and key public investments remained at the startup stage, limiting strong spillovers into value added.

Impact and outlook: growth above 10.5% needed

Ms. Hanh said that while two-digit growth is historically challenging, Vietnam could still meet the annual target if growth drivers are activated strongly and in concert in the remaining quarters. To offset the Q1 shortfall and move toward the annual growth target under Resolution 01, the economy must achieve growth above 10.5% in the following quarters.

She said the scenario depends on faster export growth, a strong rebound in domestic demand, and a rising contribution from new economic sectors. It also requires removing legal barriers, speeding up disbursement of public investment, and unlocking private investment flows. She noted that the Middle East conflict would need to end soon and oil prices stabilize to support progress toward the target.

Policy focus for Q2 and 2026

On the main drivers for Q2 and the full year, Ms. Hanh emphasized that public investment should continue to lead as seed capital for long-term productive capacity. In 2026, public investment is set to focus on mega-infrastructure projects including Long Thanh airport, high-speed rail, beltway clusters, expressways, and the Olympic Sports City. She described these as a process of building production capacity, reducing logistics costs, and stimulating FDI and private investment in satellite areas around new infrastructure.

Domestic consumption is expected to improve through wage reform policies and local stimulus measures. With the purchasing power of over 100 million people, services, accommodation, dining and e-commerce are expected to help keep the domestic economy active when exports face difficulties.

To address cost-push inflation, she pointed to the proactive use of fuel taxes and the price stabilization fund as a “safety valve” to curb cost pressures. This is intended to support transport and manufacturing margins, protect purchasing power and maintain macro stability.

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