UOB analysts note that Viet Nam’s economic activity has begun to recover, thanks in part to the temporary 90-day tax deferral period.

Exports to the US, Viet Nam’s largest market, surged by 34% year-on-year, the fastest pace since January 2024.

Export and import turnover in April rose sharply beyond expectations compared to the same period last year, by 20% and 23% respectively.

This uptick was largely driven by businesses accelerating transactions ahead of the expiration of the tax deferral. Exports to the US — Viet Nam's largest export market — jumped by 34% year-on-year, marking the highest increase since January 2024.

Despite this momentum, UOB maintains a cautious outlook for Viet Nam’s prospect due to its heavy dependence on trade - exports account for approximately 90% of GDP, with the US alone making up about 30% of total exports.

Furthermore, exports are concentrated in key industries such as electricity, electronics, furniture, textiles, and footwear, which together represent around 80% of total export revenue to the US.

“We maintain our full-year GDP growth forecast for Viet Nam at 6.0% in 2025 and 6.3% in 2026. For Q2 and Q3 of 2025, GDP growth is expected at 6.1% and 5.8%, respectively,” UOB experts stated.

Inflation in Viet Nam has also somewhat eased, standing at around 3.1% year-on-year in both March and April — down from an average of 3.6% in 2024 and 3.26% in 2023, and still well below the target of 4.5%.

In this context of moderate inflation — combined with rising global trade tensions and tariff uncertainty — there may be room for the State Bank of Viet Nam (SBV) to loosen monetary policy parameters.

However, unlike some neighbouring countries, the current weakness of the VND remains a key consideration for the SBV. In the current context, UOB analysts forecast that the SBV will hold its policy rates steady, with its refinancing rate maintained at 4.50%.

In addition, if domestic business conditions and the labour market weaken significantly, UOB anticipates that the SBV could cut the refinancing rate once, down to the low rate of 4.00% in the Covid-era, and possibly further by 50 basis points to 3.50%, provided the foreign exchange market remains stable and the US Federal Reserve (Fed) proceeds with interest rate cuts.

“At present, our baseline scenario remains that the SBV will maintain its current policy rates,” UOB experts commented.

UOB’s report also highlights that the VND is one of the region’s worst-performing currencies, even as most Asian currencies are recovering in Q2/2025. Since the beginning of the quarter, the VND has depreciated by 1.8%, hitting a new record low of around 26,000 VND per USD.

“This depreciation is primarily due to a less positive economic outlook — we have revised our 2025 GDP growth forecast down to 6.0% from 7.09% in 2024 — along with the heightened risk that the US may reinstate a 46% tariff announced on ‘Liberation Day’ if US–Viet Nam trade negotiations fail to make meaningful progress. These factors are expected to continue exerting short-term pressure on the VND,” UOB analysts added.

As a result, UOB expects the VND to continue trading at weaker levels against the US dollar through Q3/2025.

However, from Q4/2025 onwards, the VND may begin to recover, in line with a general improvement of Asian currencies as trade tensions gradually subside.

UOB updated its forecast for USD/VND exchange rate at 26,300 in Q3/2025, 26,100 in Q4/2025, 25,900 in Q1/2026, and 25,700 in Q2/2026.

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