Vietnam’s Q2 GDP growth accelerates to 8.39% despite global headwinds

[HANOI] Vietnam’s economic growth accelerated in the second quarter compared to the first, government data showed on Friday (Jul 3), but its trade deficit widened to a record over the first six months after a surge in imported fuel costs.

Gross domestic product in the April-to-June period rose 8.39 per cent from a year earlier, faster than the revised 7.94 per cent expansion in the quarter ending in March, the National Statistics Office (NSO) said in a report.

The South-east Asian manufacturing hub is targeting economic growth of more than 10 per cent in 2026, supported by stronger infrastructure spending, but its ambitious plans are at risk of being derailed by the impact of the Iran war.

“In the first six months of 2026, the global situation continued to evolve in a complex, uncertain and increasingly unpredictable manner,” the NSO said.

The agency said Vietnam would need to raise growth to 11.7 per cent in the second half of the year to meet its annual target.

The statistics office added that global inflation was accelerating, financial market conditions were more restrictive, and “global economic growth showed signs of slowing”.

The warning came a day after the country’s central bank said that global risks were putting pressure on its policy management and creating mounting inflationary pressures.

Vietnam’s annual inflation rate came in at 4.69 per cent in June, compared with 5.6 per cent in May. The government is targeting an inflation rate of 4.5 per cent for 2026.

“Inflation control efforts are expected to face difficulties in the last six months amid higher costs of petrol, oil and production input materials,” said Nguyen Thu Oanh, a senior NSO official.

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Exports of goods rose 28.1 per cent in June from a year earlier to US$50.79 billion, while imports soared 45.2 per cent to US$53.43 billion, resulting in a trade deficit of US$2.64 billion.

This brought the trade deficit for the first half of this year to arecord US$16.65 billion, compared with a trade surplus of US$7.95 billion in the same period last year, with the country paying higher prices for imported fuels.

Imports of crude oil in the first half fell 14.2 per cent in volume, but were up 17.7 per cent in value, according to the report. Imports of refined fuels rose 9.6 per cent in volume and 73.5 per cent in value.

A widening trade deficit is negative for the country’s foreign exchange reserves, which are already below the levels proposed by the International Monetary Fund.

Industrial production in June rose 12.7 per cent from a year earlier, while retail sales were up 14.8 per cent, according to the NSO.

Foreign investment ​inflows in the six-month period rose ​11.2 per cent from a year earlier to US$13 billion, the NSO said.

Last month, a deputy finance minister said Vietnam would stick to its economic growth target of 10 per cent this year, despite a widening trade ​deficit and other challenges. REUTERS