The bank also projected Vietnam’s GDP would expand by 6.1% in the second quarter and 5.8% in the third quarter of this year.

Despite maintaining its outlook, UOB acknowledged several risks, particularly from international trade tensions. Vietnam’s real GDP growth in the first quarter of 2025 slowed to 6.93% year-on-year, below the bank’s earlier estimate of 7.1% and the 7.55% recorded in the previous quarter. The slowdown was partly attributed to the Lunar New Year holidays but was cushioned by resilient trade and investment activity.

However, market sentiment in April was dominated by the April 2 announcement of sweeping new tariffs under the so-called “Liberation Day” policy. The United States imposed a punitive 46% tariff on Vietnamese exports, far higher than expected, along with a 10% “baseline” tariff for nearly all countries except China. Even Singapore, which enjoys a bilateral free trade agreement with the US, was not exempt.

These tariff measures rattled global markets and led economists to revise growth forecasts downward. UOB downgraded its forecast for Vietnam from 7.0% to 6.0%, following the sharp change in global trade dynamics. This is a marked shift from the 7.09% growth seen in 2024. Vietnam’s National Assembly had previously targeted at least 8% growth in 2025 and aimed for double-digit growth between 2026 and 2030.

UOB analysts highlighted Vietnam’s vulnerability to external shocks, given its export-driven economy. Exports account for approximately 90% of the country’s GDP, and around 30% of those go to the US. Key sectors such as electronics, furniture, apparel, and footwear are particularly exposed.

Following the April 2 tariff announcement, the US introduced a 90-day pause starting April 9 to allow time for trade negotiations. The second round of talks took place from May 19–22, with another round scheduled for the end of June. The outcome of these discussions will be critical, especially as the tariff pause is set to expire on July 9.

In the meantime, Vietnam has experienced a short-term boost in trade activity, driven by “frontloading” during the 90-day window. Exports in April jumped 20% year-on-year, while imports surged 23%. Exports to the US soared by 34%, the fastest growth since January 2024.

Despite the recent uptick, economists remain cautious, warning that Vietnam’s growth prospects hinge heavily on how trade negotiations unfold and whether the looming tariffs become permanent.

Vietnam's GDP expands by 6.93% in Q1

Vietnam’s gross domestic product (GDP) grew 6.93% in the first quarter of 2025 compared to the same period last year, the highest Q1 rate since 2020, the National Statistics Office (NSO) reported at a press conference in Hanoi on April 6.