VIETNAM’S ECONOMY CONTINUES TO PERFORM WELL IN JAN-APR

Shipping containers are handled at at port - PHOTO: VNA

HCMC – Vietnam’s economy in the first four months of 2026 showed solid gains in industrial production, consumption and investment, but structural bottlenecks in the business sector and pressures on the trade balance persisted.

Industrial production remained a central pillar of growth, according to the National Statistics Office under the Ministry of Finance.

The Index of Industrial Production (IIP) rose 9.2% year-on-year during the four-month period, with manufacturing and processing expanding 9.9% and accounting for 7.8 percentage points of the overall increase.

Growth was recorded across all 34 localities with industrial activity. Employment in industrial enterprises also rose 3.6%, signaling stronger production demand.

The agricultural sector showed a less positive trend. The area under winter-spring rice fell by 36,800 hectares, while summer autumn planting reached only 50.9% of the level recorded a year earlier.

Several traditional crops such as maize, peanuts and sweet potatoes continued to shrink due to low returns. Buffalo and cattle farming declined, reflecting long production cycles and weak profitability, while poultry and pork maintained a recovery trend.

Fisheries were a relative bright spot, with output rising 3.1%, mainly driven by a 5.2% increase in aquaculture.

Investment remained a key growth driver. Public investment reached VND187.1 trillion, equivalent to 19.7% of the annual plan and up 10.4% versus the year-ago period.

Notably, registered foreign direct investment (FDI) rose sharply to US$18.24 billion, up 32%, while disbursed FDI totaled US$7.4 billion, an increase of 9.8%.

Meanwhile, overseas investment by Vietnamese firms surged to more than double year-on-year. The expansion of both inflows and outflows highlights increasingly dynamic two-way capital movements and deeper integration of Vietnamese businesses into the global economy.

The business sector showed signs of recovery, but remained fragile.

The total number of newly-established and reactivated enterprises exceeded 119,400, up 32.8%. However, the number of firms exiting the market remained high at 108,900, an increase of 12.8%.

On average, about 27,200 businesses withdrew each month, nearly matching the number of new entrants. This suggests the business environment continues to pose significant risks, particularly for small- and medium-sized enterprises.

Trade reached US$344.17 billion in the period, up 24.2% from a year earlier. Exports grew 19.7%, but faster import growth of 28.7% shifted the trade balance to a US$7.11 billion deficit. The foreign-invested sector continued to dominate, contributing about 80% of export value, while domestic firms accounted for the remaining 20% and posted a sizable deficit.

Domestic consumption maintained solid momentum, with total retail sales and service revenue reaching VND2.546 quadrillion, up 11.1% year-on-year. The real growth rate points to a clear recovery in domestic demand. At the same time, international arrivals rose 14.6% to 8.8 million, the highest level in recent years, supporting the services and tourism sectors.

On prices, the average consumer price index (CPI) in the first four months rose 3.99%, remaining within the Government’s target range. However, gold prices surged 75.13% from a year earlier, reflecting sharp volatility in asset markets. The U.S. dollar index increased modestly by 2.29%, suggesting limited exchange rate pressure.

State budget performance remained strong. Total revenue reached VND1,114 trillion, equivalent to 44% of the annual estimate and up 15.2% year-on-year, while spending totaled VND668.2 trillion, rising 11.6%. Higher revenue relative to expenditure provided additional fiscal space to support public investment and social welfare.

On the social front, the labor market showed signs of stability, with 96% of households reporting income as stable or higher. The Government also provided 15,300 tons of rice to support people during periods of hardship. However, several risks remain. Dengue fever cases approached 45,000, traffic accidents resulted in more than 3,200 deaths, and natural disasters caused nearly VND497 billion in damages, up 3.7 times from a year earlier. Environmental violations exceeded 6,400 cases, rising sharply by 30.9%.

Overall, the economy is recovering, driven mainly by industry, consumption and foreign investment. However, the growth structure remains heavily reliant on the foreign invested sector, while domestic enterprises continue to face weaknesses. The return to a trade deficit is a development to watch, particularly as imports of production inputs account for as much as 94.2%.

For the months ahead, the challenge is not only to sustain growth but also to improve its quality, strengthen the resilience of domestic businesses and manage macroeconomic risks amid a recovery that remains uneven.

Source: The Saigon Times