3M26: Growth moderated while geopolitical wounds begin to fester

Vietnam’s economic performance in March and the first quarter showed solid momentum. Trade and industrial production remained resilient, while consumption stayed robust, supported by record tourist arrivals. FDI inflows were a key highlight, recording impressive growth. GDP expanded by 7.83% in 1Q26 — marking the highest first-quarter growth in over a decade, even as the pace moderated slightly from the previous quarter, these impressive figures continue to paint a bright and promising picture so far. However, downside risks are emerging more rapidly and severely than expected. Inflation accelerated sharply in March, almost single-handedly driven by surging energy prices amid the persistent tensions in the Middle East. Should the energy crisis persist, inflationary pressures could intensify further and spill over to other goods and services. This, in turn, risks adding a somber dark shade to the bright economic canvas that has been so promisingly painted and poses challenges to Vietnam’s ambitious double-digit growth target—especially as even stronger growth will be needed in the coming quarters to sustain the current trajectory.