Despite lowering its regional outlook, the Asian Development Bank (ADB) maintains a positive forecast for Vietnam, projecting GDP growth of 6.3% in 2025 due to robust exports and increasing foreign investment.

In its July 2025 edition of the Asian Development Outlook (ADO), released on July 23, ADB revised downward its economic growth projections for developing economies in the Asia-Pacific. The adjustment was driven primarily by expected declines in exports amid rising U.S. tariffs, global trade instability, and weakening domestic demand.

Vietnam’s GDP projected to grow 6.3%

Despite global headwinds, ADB experts believe Vietnam’s economy will remain resilient in both 2025 and 2026, though short-term growth may be tempered by tariff pressures. Strong import-export performance and a sharp rise in foreign direct investment (FDI) disbursement have bolstered Vietnam’s economy in the first half of 2025.

FDI pledges surged by 32.6%, and disbursements rose by 8.1% year-on-year, signaling strong international confidence in Vietnam’s economic prospects.

Public investment disbursement reached its highest level since 2018, at 31.7% of the annual plan and up 19.8% compared to the same period last year. The push for exports in response to tariff uncertainty helped accelerate trade growth - though this momentum is unlikely to persist through year-end.

A new U.S. trade agreement, announced in early July 2025, introduced significantly higher import tariffs on Vietnamese goods. This is expected to dampen export demand for the remainder of 2025 and into 2026. The Purchasing Managers' Index (PMI) indicates that industrial production has slowed since late 2024.

Despite the growing risks from trade policy volatility, ADB suggests that timely and effective domestic reforms could offset external pressures. Vietnam’s GDP growth is projected at 6.3% in 2025 and 6.0% in 2026. Inflation is forecasted to fall to 3.9% in 2025 and 3.8% in 2026.

Asia-Pacific growth projections trimmed

In the same report, ADB downgraded its regional growth forecast for developing Asia and the Pacific to 4.7% for 2025, down 0.2 percentage points from April’s forecast. The 2026 forecast was also lowered to 4.6%.

Ongoing trade tensions and higher tariffs from the U.S. are likely to continue impacting the region. Other risks include geopolitical conflicts, supply chain disruptions, energy price volatility, and a weaker-than-expected Chinese real estate market.

Albert Park, ADB’s Chief Economist, noted: “Asia and the Pacific have shown resilience in a challenging global environment this year. However, economic prospects are weakening amid rising risks and uncertainty. Economies in the region must strengthen their foundations and foster regional trade integration to support investment, employment, and growth.”

China’s growth forecast remains unchanged at 4.7% for 2025 and 4.3% for 2026, with stimulus policies expected to counterbalance declines in real estate and exports.

India, the region’s second-largest economy, is projected to grow 6.5% in 2025 and 6.7% in 2026 - both figures slightly down due to U.S. tariffs affecting exports and investment.

Mixed regional outlook

Southeast Asian economies are expected to feel the brunt of worsening trade conditions and instability. ADB forecasts 4.2% growth in 2025 and 4.3% in 2026 for the subregion - both down 0.5 percentage points from April’s forecast.

In contrast, the Caucasus and Central Asia show stronger performance, with upgraded growth forecasts of 5.5% in 2025 and 5.1% in 2026, fueled by higher oil output.

ADB also expects inflation in developing Asia and the Pacific to ease further, thanks to declining oil prices and higher agricultural yields. Inflation is projected at 2.0% in 2025 and 2.1% in 2026, down from April’s estimates of 2.3% and 2.2%, respectively.

PV