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Vietnam Outlook: New Playbook Amid Confusion
Vietnam entered 2025 with strong momentum: Q1 GDP growth reached 6.9%, the highest in five years, supported by solid manufacturing and exports. Inflation stayed manageable at 3.1%. However, new volatility emerged as the Trump campaign proposed a “reciprocal” 46% tariff on Vietnamese goods. While headlines stir concerns, we see a more measured path ahead.
Our base case: 20-30% tariff
We view the 46% tariff as unlikely to materialize. Harvard estimates only 16% of Vietnam’s exports involve Chinese transshipment. Diplomatic efforts are already underway, and Vietnam’s strategic importance to the U.S. supply chain strengthens its negotiating position. A 20–30% tariff is a more realistic outcome, with Vietnam preparing fiscal and monetary measures to cushion impacts. Under this base case, we adjust our 2025 GDP growth forecast from 7.4% to 6.3%.
Diversifying the growth model
Vietnam is not merely reacting to global trade uncertainty—it’s evolving structurally. The government is fast-tracking infrastructure investments to shift from export-led growth to domestic demand. With gross capital formation at 31.7% of GDP, there is significant room for expansion. Lower logistics costs and stronger domestic consumption will drive the next phase of sustainable growth.
Incredible opportunities in equity market
The VN-Index, the gauge of Vietnam stock market delivered a total return of 2.9% in USD in the first quarter of 2025. However, volatility heightened since the announcement of “reciprocal” tariff as 80% of the daily trading volume is retail investors. Forward P/E stands at just 9.9x, near five-year lows. Most listed firms are tied to domestic themes, not exports. With disciplined stock selection focused on strong balance sheets and resilient cash flow, investors can find compelling opportunities amid the noise.
At TIM, we believe this is a time to stay selective, stay disciplined, and lean into opportunities with conviction.
