This surplus accounts for about one-third of Vietnam’s GDP, underscoring the US market’s significant influence on the Vietnamese economy. Consequently, any shifts in US economic policy could directly impact Vietnam’s exports and foreign direct investment (FDI) inflows.

According to Prof. Dr. Pham The Anh, head of the economics department at the National Economics University, the effects of US economic policies on Vietnam primarily occur through three key channels: financial and monetary markets, tariff policies, and export growth prospects.

Currently, the US is leveraging tariffs to reduce its trade deficit and, more broadly, to increase revenue, balance its budget, and mitigate public debt risks. This approach may slow price reductions for American goods or even drive prices up, sustaining inflationary pressures. In such a scenario, the US Federal Reserve (FED) is likely to adopt a more cautious stance on interest rate cuts. If US interest rates remain high, Vietnam will find it difficult to lower its own rates, as financial markets are closely interconnected. This could lead to capital outflows from Vietnam as foreign investors shift their funds back to the US.

Moreover, US tariff policies pose risks to Vietnam’s exports, which currently total around US$140 billion, making up nearly one-third of the country’s GDP. If Vietnam becomes subject to additional US tariffs, its export value could decline, affecting economic growth in the coming years.

Vietnam’s economic outlook for 2025

Vietnam’s growth in 2025 will hinge on three key drivers: exports, domestic consumption, and investment. However, each faces huge challenges.

Regarding exports, Vietnam saw strong growth in 2024, but rising global trade protectionism, including Vietnam’s own import restrictions, could limit further expansion. Many countries are tightening trade defence measures, such as anti-dumping duties, to protect domestic industries.

For domestic consumption, income growth has failed to keep pace with growing living costs, especially in major cities. Additionally, Vietnam’s personal income tax policy remains outdated, further straining household budgets. Soaring real estate prices, particularly in Hanoi, have also increased future housing costs, prompting people to save more and spend less. These factors make it unlikely that consumer spending will be a major growth driver in 2025.

In terms of investment, private domestic investment has remained sluggish due to economic uncertainties. Meanwhile, FDI inflows have slowed, partly because of potential tariff risks and an increasingly uncertain export outlook.

Given these constraints, public investment is expected to be the primary short-term growth engine, particularly through large-scale infrastructure projects. However, this is not a sustainable long-term strategy, as Vietnam cannot continuously expand public investment without placing pressure on its budget. Overreliance on credit expansion to drive growth also carries risks, such as inflation, asset bubbles, and rising bad debt in the banking sector.

According to Prof. Dr. Pham The Anh, Vietnam must prioritize macroeconomic stability to achieve sustainable growth. Chasing short-term, high growth at the expense of stability could lead to deeper economic vulnerabilities, ultimately resulting in slower long-term growth and greater instability.

US retains top spot as Vietnam's largest export market in first month

VOV.VN - Despite down 2.1%, the United States remained Vietnam's largest export market in January, with an estimated turnover of US$10 billion, according to a report from the Ministry of Industry and Trade.