Vietnam Q1 Growth Slows to 7.83%, Reports $3.64B Trade Deficit
Vietnam’s Q1 GDP grew 7.83% year-over-year, down from 8.46% in Q4 2025 and below the government’s 10% target, as import costs surged 27% to $126.57 billion, creating a $3.64 billion trade deficit. Consumer inflation rose to 4.65% in March after diesel prices spiked 84% and gasoline jumped 21%, prompting fuel tax cuts and subsidies.
1. GDP Deceleration
Vietnam reported 7.83% year-over-year GDP growth in Q1 2026, down from 8.46% in Q4 2025 and below the government’s 10% annual target, reflecting weakening manufacturing momentum and rising input costs.
2. Inflation and Energy Shock
Heavy reliance on Middle Eastern crude—over 80% of supply—drove diesel prices up 84% and gasoline 21%, pushing consumer price inflation to 4.65% in March, with transport costs alone jumping 10.81%.
3. Trade Deficit Swells
Exports rose 19.1% to $122.93 billion, but a 27% surge in imports to $126.57 billion flipped the trade balance into a $3.64 billion deficit, a stark reversal from typical quarterly surpluses.
4. Policy Response and Outlook
The government cut fuel taxes, introduced price subsidies and promoted remote work to curb consumption; FDI inflows still grew 9.1% to $5.41 billion, while new pledges jumped 42.9% to $15.2 billion, as officials seek to diversify energy sources.