2M26: Seasonal lull amid mounting geopolitical risks

The latest socio-economic report indicates that economic activity in Vietnam slowed noticeably in February, largely due to the Lunar New Year holiday. Industrial production and trade volumes softened during this period as many businesses temporarily suspended or reduced operations to accommodate family gatherings and festive preparations. Meanwhile, inflation picked up more clearly, driven by stronger consumer demand ahead of the celebrations, particularly for food, goods, and services, although these seasonal price pressures are expected to ease gradually and return to normal levels in the coming months as the holiday effects fade. Looking ahead, external risks are intensifying amid escalating tensions in the Middle East. These developments could drive commodity prices higher, primarily through supply disruptions and pass-through effects on global energy prices, thereby raising inflation risks in the period ahead. Should these pressures persist, they would pose additional challenges to the global economic outlook, with direct implications for Vietnam’s economy in the coming months.