Vietnam Growth Slows as Rising Energy Costs Feed Uncertainty

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(Bloomberg) — Vietnam’s economic momentum slowed in the first quarter as escalating tensions in the Middle East drive up energy costs and disrupt global trade routes, complicating General Secretary To Lam’s push for double-digit growth.

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Gross domestic product expanded 7.83% from a year earlier, down from 8.46% in the fourth quarter, the National Statistics Office said in Hanoi on Saturday. That was higher than the median estimate of 7.6% in a Bloomberg survey of seven economists.

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“Global conditions in Q1 2026 remained complex and unpredictable, with escalating Middle East conflicts driving energy price volatility, supply disruptions, and rising inflation,” the statistics office said in a statement.

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The Southeast Asian nation, which is targeting sustained 10% growth, is navigating rising fuel prices and tightened supplies from the Iran war, which has effectively halted shipping of oil and gas through the Strait of Hormuz. The government has tapped its emergency fuel fund to stabilize prices and Vietnamese airlines have slashed flights due to jet fuel shortages.

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Still, inflationary pressures are rising. Consumer prices increased 4.65% in March from a year earlier. The government targets a ceiling of 4.5% this year.

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The manufacturing powerhouse posted a $33.9 billion billion trade surplus with the US in the first quarter, a 24.2% increase from the year before, the agency said. Vietnam had the third-largest US trade gap last year, behind only China and Mexico, underscoring the scale of supply chain shifts away from its northern neighbor. In January, it overtook them both to record the largest monthly deficit with the US.

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Exports rose about 20.1% in March from a year ago. Manufacturing, which grew 9.73% in the first quarter, remained the key driver of economic growth, according to the statistics office. Imports climbed 27.8% last month.

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Prime Minister Pham Minh Chinh previously warned of mounting pressure on inflation, interest rates and energy due to global tensions, and the potential knock-on impact for production capacity and businesses. 

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Vietnam won’t trade short-term growth for macroeconomic stability, State Bank Governor Nguyen Thi Hong said in a central bank website post last week.

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In an effort to shore up domestic fuel supplies, Vietnam has halted some taxes on gasoline, oil and jet fuel until April 15 to ensure national energy security. It’s also pushing for a faster transition to electric vehicles and biofuels as it seeks to reduce dependence on imported petroleum products.

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The government is banking on a massive public investment campaign to help spur economic growth, with hundreds of projects under construction, including Long Thanh International Airport. The prime minister has pushed for the flagship project, which is outside of Ho Chi Minh City, to begin operations in the final quarter of the year. 

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—With assistance from Nguyen Kieu Giang and Linh Vu Nguyen.

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(Updates the story with more details beginning in the third paragraph.)

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