Vietnam’s economic prospects for 2026 remain favourable due to stable macroeconomic fundamentals and strong domestic growth drivers, although geopolitical tensions and changes in global trade policy may create new risks, analysts at United Overseas Bank (UOB) said in a recent report.
In its latest update on global and regional economic prospects, the Singapore-based bank said the world economy is likely to remain volatile in 2026 as geopolitical conflicts and policy shifts continue to shape global markets.
Proposals related to new US tariffs are increasing risks to global trade, while geopolitical tensions in the Middle East, particularly conflicts involving the US, Israel and Iran, are making energy and commodity markets more sensitive to political developments.
Suan Teck Kin said evolving US tariff policies and escalating tensions in the Middle East are key factors affecting economic stability in Asia.
An escalation of conflict in the Middle East and potential disruptions to the Strait of Hormuz have become major macroeconomic threats to Asia, mainly through higher oil prices, rising inflationary pressures, weaker domestic currencies and deteriorating market sentiment, he said.
Despite these challenges, UOB has maintained its growth and inflation forecasts for most Asian economies, including Vietnam, although it acknowledged downside risks to growth and upside risks to inflation.
The bank noted that Vietnam entered 2026 on a solid footing after posting economic growth of 8.02 per cent in 2025, reflecting a strong rebound in manufacturing, exports and domestic consumption.
On that basis, UOB maintained its forecast for Vietnam’s gross domestic product growth at 7.5 per cent in 2026, with first-quarter growth projected at around 7 per cent.
Key growth drivers are expected to include the government’s commitment to accelerating infrastructure investment, continued expansion of export-oriented manufacturing and sustained inflows of foreign direct investment.
However, external uncertainty could still affect the outlook. A proposed global tariff of 10 per cent by the US could disrupt trade flows and supply chains, while fluctuations in energy prices driven by geopolitical tensions may raise production and logistics costs.
Commenting on the potential impact of Middle East tensions on domestic fuel prices, Dinh Duc Quang said the conflict remains a major factor influencing global oil prices, which in turn affect domestic fuel costs, an important input for manufacturing, transport and other sectors.
Nevertheless, he noted that Vietnam has been working to diversify its energy supply sources in recent years while enhancing energy self-sufficiency through crude oil exploitation, expanding domestic refining capacity and accelerating the transition to renewable energy such as solar and wind power. These measures could help mitigate the impact of global fuel price volatility.
Regarding monetary policy, UOB expects the State Bank of Vietnam to keep the refinancing rate unchanged at 4.5 per cent as economic growth remains resilient and inflation stays under control.
Vietnam’s inflation eased to 2.53 per cent year-on-year in January 2026, down from 3.48 per cent in December 2025 and below the market forecast of 3.1 per cent, with price increases mainly driven by food, housing and education.
Meanwhile, oil prices may rise in the short term due to tensions in the Middle East. Under UOB’s baseline scenario, Brent crude could climb to around USD 90 per barrel in the second quarter of 2026 before easing to about USD 80 by the end of the year.
Drawing from the experience of 2022, when oil prices surged to USD 128 per barrel following the Russia-Ukraine conflict, UOB estimates that every USD 10 increase in Brent crude could push Vietnam’s consumer price index up by 0.3-0.4 percentage points after a lag of two to three months, while reducing GDP growth by about 0.6-0.9 percentage points over the following two to four quarters.
On the currency market, the Vietnamese dong has given up some of its early-year gains amid rising geopolitical tensions, with the USD/VND exchange rate rebounding to around VND 26,200 per USD in early March.
While global risk aversion may continue to pressure the Vietnamese dong in the near term, UOB expects its medium-term outlook to remain stable, supported by strong economic fundamentals, robust foreign investment inflows and the possibility of Vietnam being upgraded to emerging market status later this year.
The bank forecasts the USD/VND exchange rate to fluctuate within a range of about 2-3 per cent in 2026, reaching around VND 26,400 per USD in the second quarter, VND 26,200 in the third quarter and easing to approximately VND 26,100 by the end of the year.