Real Growth Drivers: Production and FDI Lead, but with Uneven Spillover
Entering 2026, Vietnam’s economy continues to maintain a strong growth momentum. Q1 GDP grew by 7.83%, the Industrial Production Index (IIP) increased by 9.0%, with manufacturing alone rising by 9.7%. At the same time, FDI inflows remained robust, with registered capital reaching USD 15.20 billion (up 42.9%) and disbursed capital reaching USD 5.41 billion (up 9.1%), the highest Q1 disbursement in five years.
On the surface, this reflects a clearly positive growth picture. However, a deeper look reveals that growth drivers are not evenly distributed but are concentrated in specific sectors. Production continues to expand, but is largely tied to FDI, with 82.8% of implemented FDI concentrated in manufacturing. While this reinforces Vietnam’s role in global supply chains, it also highlights a structural shift: industrial growth is increasingly dependent on the FDI sector rather than domestic enterprises.
This divergence is most evident in export structure. In Q1 2026, total exports reached USD 122.93 billion, up 19.1% year-on-year. However, exports from the domestic sector declined by 16.6%, while the FDI sector grew strongly by 33.3% and accounted for 80.1% of total exports. This indicates that export growth no longer reflects the overall health of the domestic economy, but is increasingly driven by the FDI sector.
On the domestic demand side, consumption continues to grow but has not yet become a strong enough driver to rebalance the economy. Total retail sales and service revenues reached VND 1,902.8 trillion, up 10.9% nominally, but only 7.0% in real terms after adjusting for inflation. This suggests that a meaningful portion of growth is price-driven rather than volume-driven.
At the same time, imports grew by 27.0%, faster than exports (19.1%), resulting in a USD 3.64 billion trade deficit. Overall, while the economy is growing strongly, the structure of growth clearly reflects divergence between the FDI and domestic sectors, as well as between production and consumption.
Capital Environment and Policy: Capital Remains Available, but Standards Are Higher
The capital environment in 2026 has shifted compared to previous years. Inflationary pressure has returned, with CPI rising 3.51% in Q1 and 4.65% year-on-year in March. The main drivers are energy and logistics costs, with gasoline prices increasing by 29.72% and diesel by 57.03%.
At the same time, a stronger USD globally has put pressure on exchange rates. The free-market USD rate is around 26,315 VND/USD, while the USD price index rose 2.58% year-on-year. Although the official exchange rate remains stable at 25,102 VND/USD, liquidity conditions are clearly no longer as loose as before.
However, fiscal policy continues to support growth. State budget revenue reached VND 829.4 trillion (up 11.4%), while expenditure reached VND 530.1 trillion (up 23.1%), with development investment spending rising sharply by 44.6%. This indicates that the government is actively sustaining growth through public investment.
In this context, capital is not scarce, but its allocation has become more selective. Investors and financial institutions are no longer driven by headline growth, but increasingly focus on business quality. This means that access to capital remains available, but primarily for companies with clear financial structures, strong cash flow, and credible execution capabilities.
Capital Market Cycle: Liquidity Turns More Cautious
Stock market dynamics reflect this shift clearly. Based on internal technical analysis, the VN-Index is currently in a late Stage 3 (distribution phase). The index is trading around 1,684 points, below key 10-week and 20-week moving averages, and only slightly above the long-term support near the 40-week average.
Recent rebounds have not been supported by strong liquidity. Trading volume remains below the 20-day average, suggesting that current rallies are more technical in nature rather than signaling a new growth phase.
At present, key resistance lies around 1,760–1,790 points, while near-term support is at 1,580–1,630 points.
For businesses, this carries a clear implication. Capital markets are not closed, but they are no longer in an easy expansion phase. Access to capital will increasingly depend on internal business quality rather than overall market momentum.
Strategic Implications: Growth Continues, but No Longer Broad-Based
Overall, Vietnam’s economy is clearly in a growth phase, but that growth is becoming increasingly differentiated—across FDI and domestic sectors, production and consumption, and headline growth versus underlying capital quality.
In this environment, businesses need to adjust their strategic approach. Instead of expanding based on general economic momentum, companies should pursue selective growth aligned with real demand drivers such as FDI supply chains, exports, or public investment. At the same time, capital discipline becomes critical, with a focus on cash flow management, financial transparency, and operational efficiency.
Over the next 3–6 months, the priority should not be rapid expansion, but increasing readiness—strengthening internal structures, standardizing financial systems, and preparing to capture capital opportunities when conditions become more favorable.
Growth is still ongoing, but in this cycle, opportunities are no longer evenly distributed. Companies that clearly understand their position within this evolving structure will have a distinct advantage in the next phase.
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Data source: National Statistics Office
What this means for your business?
Not all businesses are affected in the same way by the same market conditions. In practice, there are cases where revenue changes do not reflect the true quality of the business, opportunities exist but cannot be effectively executed, or important decisions need to be made without a clear basis.
The issue is not what is happening in the market, but rather identifying what is actually affecting your business.
EPS works directly with business leaders through focused sessions to clarify these impacts and define appropriate courses of action in the current context.