Singapore-based United Overseas Bank (UOB) has significantly revised its forecast for Vietnam's GDP growth in 2026, raising it to 8.5%. This adjustment comes after the bank had previously downgraded its estimate to 7%. The upward revision is attributed to Vietnam's impressive economic performance, with GDP growth reaching 8.39% year-on-year in the second quarter of 2026, up from 7.94% in the first quarter. This improvement brings the first half's growth figure to 8.18%.

In its latest economic update, UOB highlighted that this growth rate surpassed its earlier expectations, even in the face of geopolitical risks in the Middle East and high energy prices. The bank pointed out that the robust growth was supported by a broad-based momentum across key sectors, including industry, construction, services, and agriculture, allowing Vietnam to maintain its status as the fastest-growing economy in ASEAN.

Despite the optimistic forecast, UOB cautioned that achieving the Vietnamese government's ambitious 10% growth target may be challenging due to ongoing uncertainties in the global economy. The manufacturing sector, in particular, has been the main driver of growth, with the industrial and construction sector expanding by 10.51% year-on-year in the second quarter, up from 9.01% in the previous quarter. The Index of Industrial Production (IIP) also recorded a 12.7% year-on-year increase in June and a 10.8% rise in the first half of the year.

Manufacturing alone grew by 11.4%, buoyed by increasing global demand for artificial intelligence (AI)-related products as major technology companies continue to invest. Foreign Direct Investment (FDI) has also shown positive trends, with disbursed FDI reaching approximately $13 billion in the first six months of the year, marking an 11.2% increase compared to the same period last year. Newly registered FDI surged by 61% to $34.7 billion, underscoring Vietnam's attractiveness as a destination for foreign investment amid global supply chain diversification.

However, the bank noted that the strong economic performance has led to a weakened external balance. While exports rose by 22.8% in the last quarter, imports surged by 38.14%, resulting in a trade deficit of around $11.8 billion for the second consecutive quarter. The first-half trade deficit reached approximately $15 billion, reversing a surplus of $7.9 billion recorded in the same period last year.

Despite these challenges, UOB experts remain optimistic, citing ongoing negotiations between the US and Iran and the reopening of the Strait of Hormuz as factors that could ease energy prices. They anticipate a potential return to a trade surplus by the end of 2026. Additionally, inflation has shown signs of moderation, with the Consumer Price Index (CPI) easing to 4.69% in June, down from above 5% in the previous months. The average inflation rate for the first half stood at 4.38%, with core inflation at 4.12%. UOB attributed some of the easing inflationary pressures to the government's measures, such as freezing gasoline taxes and promoting electric vehicles and biofuels.