HCMC – Singapore’s United Overseas Bank (UOB) has projected Vietnam’s gross domestic product (GDP) would grow 6.1% in the second quarter of 2025, supported by improved trade activity but tempered by concerns over trade tensions and the country’s heavy reliance on exports.
The bank’s Global Economics & Markets Research unit said in a June 9 report that April exports rose 20% year-on-year, while imports increased 23%. Exports to the U.S. jumped 34%, the highest level since January 2024, as companies accelerated shipments before the 90-day tariff pause ends on July 9.
Despite the trade rebound, UOB warned that Vietnam’s high export dependence could pose risks. Exports account for around 90% of GDP, with the U.S. market representing 30% of total shipments. Electronics, furniture, textiles, and footwear make up about 80% of exports to the U.S.
Vietnam is in trade negotiations with the U.S., with the second round held from May 19 to 22 and the next round expected later this month.
UOB maintained its full-year GDP growth forecast for Vietnam at 6% in 2025 and 6.3% in 2026. It expects growth of 5.8% in the third quarter of 2025.
In March, the bank had forecast Q1 growth at 7.1%, but official data showed actual growth at 6.93%.
UOB said inflation had eased to 3.1% in March and April, below the average level in 2024 and the official target of 4.5%.
With inflation moderating but trade risks rising, the State Bank of Vietnam may consider easing monetary policy. However, the weakening dong could limit policy space. UOB expects the refinancing rate to remain at 4.5%.
If economic conditions worsen, the rate could be cut to 4%, or even 3.5% if the foreign exchange market stabilizes and the U.S. Federal Reserve lowers interest rates.
The dong has been one of the weakest currencies in the region since July 2024, even though other Asian currencies are bouncing back this quarter. Since the start of the quarter, it has already dropped 1.8%, hitting a record low of about VND26,000 per U.S. dollar.
UOB attributed the currency pressure to concerns over Vietnam’s growth outlook and the risk of the U.S. reinstating the tariff of up to 46% if trade talks fail.
The bank expects the dong to stay under pressure through the third quarter, before recovering gradually in the fourth quarter. It forecasts the exchange rate at VND26,300 per U.S. dollar in the third quarter this year and VND25,700 per U.S. dollar in the second quarter next year.
