Positive Economic Outlook on the Horizon
Vietnam looks set for positive economic growth and a rise in trade, according to recent reports from international organisations. However, a growing trade deficit with the US is raising the specter of tariffs.
Strong economic growth
In its latest World Economic Outlook report, the International Monetary Fund (IMF) predicts that Vietnam will record economic growth of 6.1 per cent in 2025. This would give it a stronger GDP growth rate than some of its neighbours such as China (4.5 per cent), Indonesia (5.1 per cent), and Thailand (3.0 per cent).
Whilst impressive, this would see economic growth dip compared to 2024 (6.8 per cent) and remain below pre-pandemic levels: 2019 (7.4 per cent), 2018 (7.5 per cent), and 2016 (6.9 per cent). However, growth would be consistent with the annual average seen in the decade to 2015 (6.2 per cent).
Even so, if the IMF predictions are correct, it would make Vietnam one of the 20 fastest-growing global economies in 2025. With a total value of USD 506 billion, Vietnam would rank 33rd in terms of the biggest economies in the world. However, despite this positive prediction, GDP growth would remain below the official government target of 8 per cent, ratified in the recent Socio-economic Development Plan for 2025.
Trade in goods set to rise
Meanwhile, in a recent report published on 14 March 2025 from DHL and the New York University Stern School of Business, DHL Trade Atlas 2025, the German logistics giant predicts that Vietnam will be one of the 30 fastest-growing markets in terms of the speed (growth rate) and scale (absolute amount) of trade growth between 2025 and 2030.
With a compound annual growth rate (CAGR) of 6.5 per cent over the second half of this decade, this would see Vietnam’s growth in trade surpass the 6.2 per cent seen between 2019 and 2024. Vietnam ranked 22nd in the world for the speed of trade growth with a growth rate of 6 per cent, ahead of Cambodia (28th), Indonesia (33rd), and Malaysia (38th).
Meanwhile, Vietnam ranked 6th for scale with an absolute trade growth of USD 192.8 billion between 2019 and 2024 and a forecast trade growth of USD 271.8 billion between 2025 and 2029. This puts it ahead of other regional economies such as Malaysia (8th), Indonesia (12th), and Thailand (22nd).
The report pinpoints manufacturing diversification as one of the drivers of this trend, with electronics companies, in particular, seeking alternative locations to China. However, it also emphasises the importance of investing in infrastructure (we highlighted this issue here) if Vietnam is to unlock its potential in trade growth.
The DHL report ranks Vietnam as one of three “recent growth leaders”, alongside Ireland and the United Arab Emirates – these countries alone featured in the top 30 for both speed and scale of growth from 2019-2024. Likewise, the report marks Vietnam as one of four “future growth leaders” together with India, Indonesia, and the Philippines – four countries who are forecast to feature in the top 30 between 2025 and 2029.
“Vietnam ranked sixth on the scale dimension and 22nd on the speed dimension… Vietnam has embraced trade as a major driver of its economic development. In 1985, exports were less than 10 per cent of Vietnam’s GDP, and the country ranked among the world’s poorest (its GDP per capita was only about USD 600 at 2024 price levels). By 2023, goods exports had soared to 82 per cent of GDP and Vietnam was a middle-income country with a GDP per capita of nearly USD 4,300. Vietnam’s merchandise exports were nearly as large as its GDP because of its deep engagement with global value chains, importing inputs from abroad and exporting final products.”
The report highlights two factors as underpinning this optimism: the shift in global supply chains and diversification strategies. In fact, the ASEAN region is predicted to see the second-biggest growth over the rest of this decade – with a CAGR of 5.0 per cent – just behind South Asia (5.6 per cent). To put that in perspective, North America and Europe are set to see CAGR rates around half that (2.7 per cent) over the same period. In short, Asia is becoming more important in global trade.
Government sets ambitious export targets
This prediction aligns with ambitious plans for export-led growth. In mid-March, the Vietnamese government outlined an export target of USD 454 billion in 2025. If achieved, this would be a 12 per cent annual increase, building on the USD 65.2 billion in goods exported in the first two months of 2025 – a 9.9 per cent increase compared to 2024, according to the Ministry of Finance (MOF) and the Ministry of Industry and Trade (MOIT).
However, MOIT has highlighted that Vietnam’s dependence on major export markets like the United States, China, and Europe could leave it at risk from international economic headwinds.
Talk turns to tariffs
For instance, now that tariffs are back on the agenda, following Donald Trump’s reelection in Washington, focus has turned to the growing trade deficit between the US and Vietnam. The US had a goods trade deficit of USD 123.5 billion with Vietnam in 2024, according to the Office of the US Trade Representative. That’s an increase of 18.1 per cent on 2023. Vietnam exported USD 136.6 billion worth of goods to the US in 2024, importing just USD 13.1 billion of goods in return.
Then, just this week, the Trump administration published a comprehensive (400-page) document listing individual countries and their trade practices or policies which it considers to be trade barriers with the US. For instance, the document highlights the impact of Vietnam’s Special Consumption Tax on domestic and imported alcoholic beverages:
“Law 106/2016/QH13 increased the special consumption taxable base for imported alcoholic beverages from the import price to the sales price received by the importer, thereby significantly increasing the tax burden on importers relative to domestic producers.”
The document also lists concerns around non-tariff barriers, such as those regarding marketing authorisation for imported pharmaceutical products (which we highlighted in November) and the registration of medical devices. Likewise, it also lists various technical barriers to trade, such as labelling requirements for goods (Decree 111/2021/ND-CP) and in-country testing requirements for ICT products, even where international test reports exist.
Then, on 3 April, President Trump announced that Vietnamese exports to the US would be hit with 46 per cent tariffs, greater than those levied on China (32 per cent), the EU (20 per cent), Thailand (36 per cent), Malaysia (24 per cent), and Cambodia (10 per cent).
Speaking at a recent meeting with US business leaders, Prime Minister Pham Minh Chinh called for a new bilateral trade framework, urging the US not to impose trade barriers and to recognise Vietnam as a “market economy” (which we covered here in August 2024).
APFL Partners is one of the leading international law firms in Vietnam. For more information about investing or doing business in one of the fastest-growing markets in the region, just contact our team on: contact@apflpartners.com
Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.
