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Vietnam’s economic boom is capturing the attention of investors as the nation sets ambitious growth targets for 2025. The National Assembly has officially raised the GDP growth target to at least 8% for 2025, a notable increase from the previous 6.5%-7.0% range. This decision reflects the government’s confidence in the country’s economic momentum, especially following a 7.09% GDP growth in 2024, up from 5.05% in 2023.
Several key factors are driving Vietnam’s robust economic performance. Firstly, Vietnam’s economy is heavily reliant on exports. In 2024, exports recorded a significant upswing and contributed to the increase in overall GDP. Foreign direct investment (FDI) is another factor driving the country’s economic success. Last year saw $502.8 bn USD inflows in FDI, with the manufacturing and processing industry getting the biggest portion.
Vietnam is also investing heavily in infrastructure to support economic expansion. Notably, the government has approved significant projects recently, including the construction of the country’s first nuclear power plants and an $8.3 bn rail link connecting northern Vietnam’s major seaport to China. These projects aim to enhance trade connectivity and energy security.
Vietnam most exposed to possible direct tariffs by the US
However, given Vietnam’s dependence on trade, there are concerns that fresh tariffs from the United States under the second Trump presidency will weaken the country’s export competitiveness and could, therefore, put the brakes on Vietnam’s economic boom.
Vietnam reached a significant trade surplus with the US in 2024, namely $123.5 bn. This places the country in the spotlight as a potential target for new tariffs. According to ING analysts, Vietnam is particularly vulnerable due to its heavy reliance on electronics, textiles, and steel exports to the US. In 2024, steel and aluminium exports to the US alone accounted for 0.3% of Vietnam’s GDP.
Earlier this February, President Trump imposed 25% tariffs on steel and aluminium imports from all US trade partners, effective March 12. However, this is not new, as Trump introduced those tariffs initially during his first term in 2018. “If we assume that Trump is following the same strategy, these tariffs could likely be used as leverage in trade negotiations,” says Deepali Bhargava, Regional Head of Research, Asia-Pacific, at ING.
Despite these concerns around trade, many investors and analysts remain optimistic about Vietnam’s long-term growth trajectory.
“Vietnamese exports to the US grew by +132% during Trump’s first term in office, and we do not expect his second term to significantly undermine Vietnam’s strong competitive position relative to the United States or in the global export markets,” says PYN Elite’s Portfolio Manager, Petri Deryng.
Similarly, Andreas Vogelsanger, CEO of Asia Frontier Capital (Vietnam) Limited, sees limited downside risks: “Overall, we remain confident that Vietnam’s strong fundamentals, combined with its rising role as a global manufacturing hub, will sustain its growth momentum despite potential US trade policy challenges. The country’s ability to attract FDI and maintain competitive advantages ensures resilience and provides optimism for the years ahead.”
Vietnam’s economic boom puts equity market in the spotlight
Driven by favourable macroeconomic conditions, Vietnam’s stock market is expected to accelerate further after its robust performance in 2024. The VN-Index (VNI) increased by 12.11% last year despite global macroeconomic headwinds.
“The resilience of Vietnam’s stock market despite nearly $4 bn of net foreign selling, coupled with a very attractive valuation (12x Forward P/E versus ~17% expected EPS growth) means that the VNI would not need much of a catalyst to continue climbing,” says Michael Kokalari, Chief Economist at VinaCapital.
However, he warns that concerns related to Trump’s tariffs and slower export and GDP growth could weigh on the VNI in the first half of 2025.
“In the second half of the year, Vietnam’s GDP growth should accelerate if-and-when the Government takes aggressive actions to support the economy, and USD-VND depreciation pressures should ease along with concerns about Trump’s impact on Vietnam,” Kokalari adds.
PYN Elite’s Deryng anticipates robust earnings growth and highlights the potential implementation of stock market system reforms, which could enhance market accessibility and efficiency.
A key development on the horizon is Vietnam’s anticipated upgrade to emerging market status by FTSE, which could take effect by September 2025. Additionally, the long-awaited launch of the KRX trading system—developed through a partnership between the Ho Chi Minh Stock Exchange and the Korea Exchange—is set to enhance trading efficiency and market transparency. This upgrade is expected to encourage new listings and accelerate the privatisation and listing of enterprises, boosting overall liquidity and attracting greater investor interest.
