Vietnam’s trade deficit widens to $12.7 billion in first five months of 2026

VIETNAM, 22 JULY 2026 —

Vietnam’s trade deficit ballooned to $12.7 billion in the first five months of 2026 from a $5 billion surplus in 2025, the largest shortfall in nearly 30 years, UOB said.

The gap widened as imports jumped 33.8% while exports grew 18%, compared with 21% the previous month, according to UOB. Industrial production growth slowed to 9% in May from 10% in April, pulling the second-quarter average to 9.5% against 11% in the first quarter. Manufacturing showed signs of improvement, with the Purchasing Managers’ Index rising to 52.8 in May from 50.5 in April, while output climbed to 55.6.

Inflation pressures persist. Consumer prices rose 5.6% year-on-year in May, the fastest in six years and the third consecutive monthly increase. UOB expects full-year inflation to reach 5.5%, nearing the State Bank of Vietnam’s (SBV) 4.5% target. The central bank is holding policy rates steady to balance inflation against exchange-rate stability, while urging banks to cut lending rates and extending tax breaks on fuel.

UOB forecasts Vietnam’s GDP growth at 7% in 2026, moderating to 6.7% in the second and third quarters. The bank cited resilient external demand, supported by global AI investment, as a key buffer. Improved US-China relations after mid-May talks between US President Donald Trump and Chinese President Xi Jinping were also flagged as a positive for Vietnam’s export outlook.

The SBV expects the Vietnamese dong to weaken gradually and steadily. UOB projects the USD/VND rate at 26,500 in the third quarter of 2026, 26,400 in the fourth quarter, 26,300 in the first quarter of 2027 and 26,100 in the second quarter of 2027. A potential upgrade to emerging-market status in September 2026 could further boost capital inflows.

Vietnam remains committed to long-term targets: average annual GDP growth of at least 10% from 2026 to 2030, upper-middle-income status by 2030, a modern industrial base and a place among the world’s 30 largest economies with per capita GDP of approximately $8,500.

UOB’s outlook contrasts with more cautious projections from other international institutions, underscoring the mixed short-term outlook. Manufacturing momentum is offset by rising energy costs that are squeezing corporate margins and macroeconomic stability. Higher oil prices are lifting import bills for machinery and equipment tied to major infrastructure projects, keeping the balance of payments under pressure.

For Malaysian business readers, the widening trade deficit and persistent inflation pressures in Vietnam signal potential volatility in regional supply chains and input costs, particularly for manufacturers reliant on imported components or energy-intensive processes.

Related: UOB · State Bank of Vietnam (SBV) · Donald Trump · Vietnam