OECD: Vietnam Economy Maintains Strong Recovery Momentum Through 2026-2027

This positive signal underscores the continued stability of Vietnam's macroeconomic foundation and its remarkable adaptability amidst global trade uncertainties.

The OECD noted a strong "rebound" in the Vietnamese economy during 2025, highlighted by a substantial 8.2% year-on-year GDP increase in the third quarter. Growth continues to be primarily fueled by three main pillars: final consumption, fixed asset accumulation, and the export of goods and services.

The labor market remains highly positive, with the unemployment rate standing at a historic low of just 2.2% since the third quarter of 2024. This, coupled with a rising labor participation rate, reflects an expanding and stable employment environment.

OECD: Vietnam Economy Maintains Strong Recovery Momentum Through 2026-2027

Exports and FDI Remain Central Pillars

Despite volatile global trade conditions, Vietnam’s exports of goods and services have maintained significant growth. In the first nine months of 2025, export turnover increased by 15.5%. Notably, exports to the US—which accounts for approximately 30% of total turnover—surged by 27.7%, even as risks related to US import tariffs persist.

Foreign Direct Investment (FDI) has also seen stable growth since mid-2023, solidifying its role as a crucial growth catalyst. These capital flows not only inject resources but also drive technology transfer and enhance national productivity.

Challenges and Policy Adjustments

However, the OECD cautioned that external demand is expected to weaken in 2026, placing pressure on exports—a core growth engine for Vietnam. As a highly open economy, Vietnam remains vulnerable to shifts in global policies.

Domestically, while private consumption is expected to remain stable due to rising real wages and employment, a planned adjustment to the Value Added Tax (VAT) in 2027 may cause a short-term slowdown in consumption. Inflation is also projected to increase, driven by robust domestic demand and the one-time impact of the VAT adjustment, alongside other factors like increases in pensions, minimum wages, and public service prices.

To counterbalance external headwinds, the OECD believes that public investment—especially following earlier periods of slow disbursement—will remain a vital support mechanism for aggregate demand and growth. The organization consequently raised its 2026 growth forecast by 0.2 percentage points compared to its June 2025 report.

Policy Recommendations

The OECD advises that while fiscal policy needs to continue supporting the economy (especially public investment to help reach the 8% growth target for 2025), it should gradually return to a neutral stance in the medium term due to rising inflationary pressures. The reduced VAT incentive (from 10% to 8%) is scheduled to end by late 2026.

Regarding monetary policy, the State Bank of Vietnam is advised to closely monitor inflationary developments and be ready to adjust its stance flexibly if price pressures increase more sharply than anticipated.

To sustain long-term growth, the OECD recommends strengthening institutional reforms focused on productivity and the quality of growth. Key recommendations include:

• Refining the monetary policy framework to be more market-signal-based.
• Further opening the service market and reducing barriers for foreign investors.
• Enhancing competition between private and state-owned enterprises.
• Creating incentives to reduce the informal labor sector, which accounts for about two-thirds of the workforce, to expand social security coverage and boost overall productivity.
• Encouraging domestic enterprises to climb higher on the value chain of global supply networks.

Despite an anticipated slowdown in the next two years, the OECD still ranks Vietnam among the fastest-growing economies in Asia, aligning with other major international forecasts, such as those from HSBC, UOB, and Standard Chartered.