Vietnam delivered another strong economic performance in the first half of 2026. Real GDP expanded by 8.2 percent year-on-year, compared with 7.6 percent in the same period of 2025, supported by manufacturing, exports and rising investment. These figures reinforce Vietnam’s position as one of the region’s more dynamic economies. Yet the underlying data also reveal a more complex picture. Growth is becoming increasingly dependent on imported machinery, components and intermediate inputs, while banking liquidity is tightening, financing costs are rising and external buffers are narrowing. Vietnam remains attractive, but the investment environment increasingly rewards investors who are selective, well prepared and able to understand how individual opportunities fit within the wider economy.

Strong growth, but with rising import dependence

Vietnam’s merchandise exports increased by 21 percent in the first half of 2026, led by high-technology products and other manufactured goods. Manufacturing momentum also remained positive, with the Purchasing Managers’ Index in expansion territory and forward-looking indicators such as new export orders and purchases strengthening.

Imports, however, increased more rapidly than exports. Much of this growth came from electronics, machinery and intermediate production inputs, pushing the merchandise trade balance into deficit. This reflects an important structural feature of Vietnam’s manufacturing economy: many export-oriented industries still rely heavily on imported equipment, materials and components.

Higher imports of machinery and productive inputs are not necessarily a negative signal. They may support future production capacity and export growth. In the near term, however, faster import growth weakens the contribution of net exports to GDP and adds pressure to the current account and foreign-exchange reserves.

For investors, export growth alone is therefore not a sufficient measure of competitiveness. A more meaningful assessment should consider how much value is created domestically, how dependent a business or project is on imported inputs, and how exposed its operating model may be to exchange-rate movements, logistics costs and changes in trade policy. Two businesses may report similar export growth, but their resilience can differ substantially depending on the strength of their local supply chains and the amount of value retained in Vietnam.

Investment momentum remains strong

Investment was one of the principal drivers of economic expansion during the first half of the year. Growth was led by the private sector and followed by foreign direct investment. Newly registered FDI increased by 87 percent compared with the same period of 2025, while FDI disbursement was 11.2 percent higher year-on-year by June. These figures indicate that international investors continue to view Vietnam as a competitive manufacturing and export platform with credible medium-term prospects.

Credit also remained supportive of investment, although annual credit growth moderated to 16.7 percent in June. Lending activity remained strong across investment-related sectors, while financing demand continued to arise from infrastructure, logistics, connectivity, digital infrastructure, machinery and equipment.

The opportunity in Vietnam is therefore broader than factory construction alone. It increasingly includes the industrial infrastructure, production systems, energy capacity, logistics networks and digital services required to support manufacturing and connect businesses with domestic and international markets.

The more important question is whether the rising volume of investment can generate stronger productivity, technology transfer, local supplier development and domestic value added. Attracting capital is only the first stage. The long-term quality of an investment also depends on whether it develops local capabilities and creates sustainable economic linkages.

Projects that build reliable domestic supply chains, strengthen local operating partners and transfer practical knowledge are likely to create more durable value than investments based mainly on imported inputs and low-cost assembly. For international investors, this distinction will become increasingly important when assessing long-term competitiveness.

Financing conditions are becoming more demanding

Vietnam’s banking system continues to provide substantial support to economic activity, but liquidity conditions have tightened. Rising credit-to-deposit ratios have contributed to repeated pressure in the interbank market. Banks have responded by increasing deposit rates to secure more stable funding, and the higher cost of funds has gradually been passed on to borrowers. Lending rates had reached approximately 10 percent by May 2026.

This development has practical implications for domestic businesses, foreign investors and industrial projects. A company may appear attractive based on its revenue growth, market position or expansion plans while still carrying a financial structure that becomes vulnerable when borrowing costs rise. An industrial project may offer strong long-term potential but face short-term liquidity pressure when its debt repayment schedule does not match its construction, commissioning and operating cash flows.

Recent regulatory changes provide banks with greater flexibility to use short-term funds for medium- and long-term lending. Certain loans to major infrastructure and urban-development projects may also be excluded from annual credit-growth limits. These measures could help mobilise capital for large investments, but they also increase the need to monitor maturity mismatches, credit concentration, liquidity pressure and asset quality.

Capital is likely to remain available for credible businesses and projects. It may, however, become more expensive and more selective. Investors and lenders will need to examine project viability, cash-flow visibility and repayment capacity with greater discipline. Businesses relying mainly on asset values or optimistic growth assumptions may find financing more difficult than those able to demonstrate clear operating cash flows and a realistic capital structure.

External and trade-policy risks are becoming more relevant

Vietnam’s external position weakened during the first half of 2026 as imports grew more rapidly than exports, pushing the merchandise trade balance into deficit. The World Bank also noted that the overall balance of payments had already moved into deficit in the first quarter, while import-intensive growth was reducing reserve coverage and adding pressure to foreign-exchange reserves.

Foreign direct investment remained the most reliable source of external financing. Portfolio flows were weak, while other investment flows remained volatile. This reinforces the importance of stable, long-term investment capital in supporting Vietnam’s external position.

Trade-policy uncertainty has also increased. The World Bank highlighted proposed United States duties of between 10 and 12.5 percent related to forced-labour concerns, together with investigations involving manufacturing overcapacity and intellectual-property protection. These developments could affect the competitiveness of some Vietnamese exports and increase scrutiny of the production and supply chains behind them.

The implications extend beyond tariff rates. International investors increasingly need to assess the traceability of inputs, labour practices, intellectual-property safeguards and the actual level of production undertaken in Vietnam. A supplier, manufacturing partner or industrial project can no longer be evaluated only on price, capacity and delivery time. Ownership transparency, compliance systems, operating discipline and the ability to document the supply chain are becoming important elements of investment quality.

A stronger economy does not make every opportunity equally attractive

Vietnam’s overall economic direction remains positive. Growth is strong, manufacturing continues to expand, foreign-investment commitments are rising and capital is flowing into productive capacity and supporting infrastructure. Yet the same data also show that the market is becoming more demanding.

The largest announced project is not necessarily the most attractive investment. The fastest-growing company may not have the strongest financial foundation. The lowest-cost industrial location may carry hidden constraints involving power availability, logistics, labour, land readiness or supply-chain dependence. A credible opportunity should therefore be assessed through a combination of market potential, local value creation, financial resilience, counterpart quality, location suitability and execution capacity.

Several practical questions deserve particular attention. How dependent is the opportunity on imported machinery and materials? Can reliable local suppliers be developed? Is the financial structure suitable for higher borrowing costs? How exposed is the business to exchange-rate movements or changes in trade policy? Does the local partner possess the governance, compliance and operating capability required to implement the investment? Is the proposed industrial location suitable in terms of infrastructure, energy, logistics, labour and project readiness? Can the project create meaningful value in Vietnam rather than operating mainly as an imported-input assembly platform?

Macroeconomic indicators can identify the direction of the market, but they cannot answer these questions on their own. Effective investment decisions still require disciplined screening, local access, technical and commercial assessment, and direct engagement with businesses, project owners, industrial developers and relevant decision-makers.

Vietnam continues to offer substantial opportunities for investors with a long-term perspective. The current environment, however, places greater value on clarity, preparation and execution. Confidence in Vietnam’s growth story remains important, but it should be accompanied by a clear understanding of where value is created, how risks are allocated, whether the industrial conditions are suitable, and whether an opportunity can remain resilient under more demanding financial and trade conditions.

EPS Investing supports international investors through Vietnam Investment Advisory. The firm helps clients identify, assess and advance credible businesses, projects, industrial opportunities, local partners and deployment locations in Vietnam. The objective is not simply to locate opportunities, but to help investors understand their commercial logic, financial quality, industrial conditions, counterpart capability and practical path toward implementation.

Le Trung Nam
Photo: Vietnam Hidden Light
Data Source: World Bank, Viet Nam Monthly Macro Monitoring, July 2026.