VIET NAM MACRO MONITORING May 2025 WHAT’ NEW? • High-frequency indicators show resilient economic activities in May, driven by export-oriented sectors such as textiles and electronics. While recovering from 45.6 in April to 49.8 in May, the PMI remained in contractionary territory amid heightened global uncertainty. • Exports continued to register robust growth, driven in part by front loading of high-tech exports. Total exports to the US in the first five months of 2025 increased to US$57.2 billion (+ 27.5 percent y/y). • Retail sales indicate continued growth of domestic consumption, driven by robust services spending. Retail service sales growth accelerated by 17.8 percent y/y, supported by firming labor income, along with the increasing number of international visitors to Viet Nam. • FDI disbursements remained resilient despite global uncertainty, registering +7.9 percent y/y growth as end of May, similar to the same period of 2024. • CPI increased from 3.2 percent in May 2025 from 3.1 percent in April, partly due to a 4.8 percent increase in electricity tariffs. • Credit growth increased to 17.5 percent y/y in May 2025, driven by credit to real estate developers. Banks increased bond issuance to strengthen their medium and long-term capital structures (VND 84.5 trillion in bonds during the first five months of 2025, about 2.5 times more than in the same period last year). • The disbursement of public investment improved significantly in May, rising to 24.1 percent of Prime Minister’s plan, compared to 21.6 percent in the same period of 2024. TO WATCH • Viet Nam and the US had a third round of trade negotiations during the week of June 9th. According to the Ministry of Industry and Trade, significant progress was made in all areas of negotiations; however, an agreement is yet to be reached. The current pause on the 46% reciprocal tariffs is set to expire early July, while another round of negotiations has been announced. • Inflationary pressures are building from rising housing costs driven by an increase in electricity price. Viet Nam Monthly Macro Monitoring Dashboard May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Industrial Production (y/y) 10.0% 12.4% 11.1% 8.4% 10.8% 7.0% 8.0% 8.8% -1.0% 17.6% 9.9% 9.6% 9.4% Manufacturing PMI 50.3 54.7 54.7 52.4 47.3 51.2 50.8 49.8 48.9 49.2 50.5 45.6 49.8 Retail sales (y/y) 9.5% 9.1% 9.4% 7.9% 7.6% 7.1% 8.8% 9.3% 9.5% 9.4% 10.8% 11.1% 9.7% Merchandise exports (y/y) 17.5% 13.2% 20.2% 15.2% 10.8% 10.2% 8.2% 12.8% -4.0% 25.7% 14.5% 19.8% 18.9% Merchandise imports (y/y) 29.9% 14.4% 25.0% 14.7% 11.1% 13.6% 9.8% 19.2% -2.6% 40.0% 19.0% 22.9% 15.5% CPI (y/y) 4.4% 4.3% 4.4% 3.5% 2.6% 2.9% 2.8% 2.9% 3.6% 2.9% 3.1% 3.1% 3.2% Core inflation (y/y) 2.7% 2.6% 2.6% 2.5% 2.5% 2.7% 2.8% 2.9% 3.1% 2.9% 3.1% 3.1% 3.3% Ex. rate (VND/USD, y/y) 2.5% 2.2% 2.1% 1.6% 0.6% 0.4% 1.1% 1.5% 1.9% 2.4% 3.3% 3.2% 2.9% FDI disbursement (YTD, y/y) 7.8% 8.2% 8.4% 8.0% 8.9% 8.8% 7.1% 9.4% 2.0% 5.4% 7.2% 7.3% 7.9% Credit growth (YTD, y/y) 14.0% 15.3% 15.3% 15.7% 16.1% 16.7% 16.6% 15.1% 16.5% 16.0% 15.7% 17.3% 17.5% Source: Haver Analytics, GSO. Note: Color scale represents value percentile across months from May 2024 to May 2025. 1 VIET NAM MACRO MONITORING May 2025 High-frequency indicators showed resilient economic activities. The Industrial Production Index (IIP) rose by 2.5 percent m/m, SA in May 2025, compared to 1.2 percent in April, supported by production growth in export-oriented sectors such as textiles and electronics. However, according to S&P Global, the fall in new export orders was broadly similar to that seen in April. While the PMI recovered from a low of 45.6 in April to 49.8- just below the 50 neutral line - in May (Figure 2), business sentiment remained low amid global uncertainty. Figure 1. Industrial production Figure 2. Manufacturing PMI index 20 55 expansion 10 +2.5% Percent m/m, SA 50 0 49.8 contraction -10 45 May-23 Nov-23 May-24 Nov-24 May-25 May-23 Nov-23 May-24 Nov-24 May-25 Month-on-month (SA) Year-on-year Viet Nam Global ASEAN Exports continued to register robust growth. Good exports increased by 4.4 percent (m/m, SA) in May 2025 (Figure 3), driven by high-tech products. Exports to the US continued to be frontloaded, resulting in a sizeable 18.9 percent (y/y) growth in May 2025, compared to 17.5 percent (y/y) in May 2024. Exports to the US in the first five months of 2025, registering US$57.2 billion (+27.5 percent y/y), compared to $44.7 billion in the same period of 2024 (+ 23.4 percent y/y). On the other hand, exports to China decelerated from 11 percent y/y in the first five months of 2024 to 2.6 percent y/y in the same period of 2025 (Figure 4), driven by telephones and agricultural products. Figure 3. Merchandise trade Figure 4. Merchandise exports (YTD, y/y) 50 Japan 30 Korea ASEAN Percent 10 EU -10 2.6 +4.4% China 11.0 m/m,SA 27.5 U.S. -30 23.4 May-23 Nov-23 May-24 Nov-24 May-25 Imports (cif, m/m, SA) Exports (fob, m/m, SA) 0 10 20 30 Exports (fob, y/y, NSA) Imports (cif, y/y, NSA) 5M-25 5M-24 2 VIET NAM MACRO MONITORING May 2025 Retail sales figures indicate continued growth in domestic consumption, driven by robust services spending. Retail sales of goods and services increased by 1.8 percent m/m SA in May, contributing to a growth of 10 percent y/y, slightly higher than 9.5 percent in May 2024 (Figure 5). Retail service sales outpaced growth in overall retail sales (Figure 6), supported by the continued firming of the labor income and increased international tourism. According to the GSO’s labor force survey, 97.1% of respondents report that their income in May 2025 remained unchanged or increased compared to the same period last year. The number of international visitors to Viet Nam reached 9.2 million visitors as end of May 2025 more than a 20 percent increase y/y. Figure 5. Retail sales growth Figure 6. Retail sales growth by type 15% 9.5% 10% y/y 50 10% 40 Travelling +1.8% 5% 30 m/m, SA Percent y/y Accomodation 0% 20 Other 10 services -5% Goods 0 -10% -10 Month-on-month (SA) Year-on-year (NSA) CPI increased from 3.1 percent in April to 3.2 percent in May 2025, driven by the housing and utility costs (Figure 7). Housing prices, including rent, utilities (electricity, water, fuel) and construction materials, increased by 6.1 percent y/y in May 2025, partly due to a 4.8 percent increase in retail electricity prices on May 10th. Tariffs increased for all user categories (households, industrial, commercial & services, agri-aqua- forestry, other), with the introduction of a scalable tariff for individual customers based on the levels of consumption. Core inflation (which excludes food, fuels, and government-administered prices) increased from 3.1 percent in April to 3.3 percent in May. Figure 7. Inflation Figure 8. Sub-sector prices 6 Percent y/y, percentage points 10 6.1 4 3.2 5 2 Percent y/y 0 0 -5 -10 -2 May-23 Nov-23 May-24 Nov-24 May-25 -15 Food Housing Transport May-23 Nov-23 May-24 Nov-24 May-25 Health & edu. Headline Core Food Housing Transports 3 VIET NAM MACRO MONITORING May 2025 Credit growth rose to 17.5 percent y/y - above SBV’s annual goal of 16 percent (Figure 9), driven by the credit to real estate developers. Banks tapped heavily into the bond markets to secure medium- and long- term funding amid low deposit rates. According to the latest data, as end of May, they issued nearly VND 84.5 trillion in bonds, equivalent to 2.5 times more than in the same period last year—and accounting for 70% of total corporate bond issuance during the first five months of 2025 (Figure 10). Figure 9. Banking credit Figure 10. Bond issuance 4.9 20 500 17.5 18 400 3.9 16 SBV's target Trillion VND 14 300 2.9 12 10 200 1.9 8 100 6 0.9 4 0 2 2022 2023 2024 5M-24 5M-25 -0.1 0 Credit institutions Securities Real estate Commerce May-23 Nov-23 May-24 Nov-24 May-25 Construction Production Month-on-month Year-on-year (RHS) Energy Others Revenue collection remained robust while disbursement of public investment improved significantly in May. Revenue collection for the first five months of 2025 reached 57.9 percent of the annual plan, higher than 52.8 percent in the same period of 2024, driven by higher collection of corporate income tax and value-added tax, in line with the robust economic activities and consumption. Total expenditure was 27.7 percent higher than the same period of 2024 and equivalent to 32.7 percent of the plan. The public investment disbursement rose to 24.1 percent of Prime Minister’s plan as of end May 2025, compared to 21.6 percent in the same period of 2024. By the end of May, the Government has issued about VND 170 trillion worth of government bonds, an increase of 34.5 percent compared to the same period in 2024, and representing 34.2 percent of total 2025 total planned borrowing. About 84 percent of the bond issuances had long maturities (10 years). Figure 11. Fiscal account Figure 12. Government bond 400 350 300 200 250 Trillion dong +34.5% Trillion dong 0 200 y/y 150 -200 100 50 -400 May-23 Nov-23 May-24 Nov-24 May-25 0 Revenue Expenditure Balance 2022 2023 2024 5M-24 5M-25 4 VIET NAM MACRO MONITORING May 2025 Sources and notes: All data are from Haver and sourced from the Government Statistics Office (GSO) of Viet Nam, except: Government budget revenues and expenditures (Ministry of Finance); PMI and producer price inflation (survey by Nikkei and IHS Markit); Purchasing Managers' Index is derived from a survey of 400 manufacturing companies and is based on five individual indexes on new orders, output, employment, suppliers’ delivery times (and stock of items purchased). It is seasonally adjusted. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change. Retail sales of goods and services are total turnover generated from retailing consumer goods and services of production and business establishments. Real income growth is the nominal growth of average monthly earnings of workers after adjusting for inflation. Information on SBV bond and OMO operations are from Viet Nam Bond Association Report, April 2025. SA=Seasonally Adjusted; NSA=Not Seasonally Adjusted; LHS = Left-hand Scale; RHS = Right-hand Scale; FOB = Free on Board; CIF = Cost, Insurance, and Freight. 5 VIET NAM MACRO MONITORING May 2025 Selected Economic Indicators Jan- Feb- Mar- Apr- May- Q1-24 Q2-24 Q3-24 Q4-24 Q1-25 25 25 25 25 25 GDP (in percent y/y, unless otherwise indicated) Real GDP growth 6.0 7.1 7.4 7.6 6.9 Final consumption 4.9 - 7.0 7.5 7.5 Investment 4.7 - 7.1 8.0 7.2 Exports 18.0 - 15.7 11.4 9.7 Imports 17.1 - 15.8 13.5 12.5 Agriculture 3.5 3.8 2.9 3.0 3.7 Industry and Construction 6.8 8.6 9.0 8.4 7.4 Services 6.2 7.4 7.5 8.2 7.7 Nominal GDP (Billion US$) 103.5 110.0 115.9 130.7 110.5 Production Industrial Production (y/y) 5.9 9.9 9.3 7.9 7.8 -1.0 17.6 9.9 9.6 9.4 PMI (Index, SA) 48.9 49.2 50.5 45.6 49.8 Domestic demand Retail sales (y/y) 8.4 9.1 8.5 9.3 9.9 9.5 9.4 10.8 11.1 9.7 Price Headline CPI 3.8 4.4 3.5 2.9 3.2 3.6 2.9 3.1 3.1 3.2 Core inflation 3.1 2.9 3.1 3.1 3.3 Labor market Labor force participation rate (percent) 68.5 68.6 68.6 69.0 68.2 Unemployment rate (percent) 2.2 2.3 2.2 2.2 2.2 Underemployment rate (percent) 2.0 2.1 1.9 1.7 1.7 Employment change (y/y) 0.3 0.4 0.5 1.2 1.0 Average monthly earnings of workers (Million VND) 7.6 7.5 7.7 8.2 8.3 State budget (Trillion dong) Revenue 539.5 481.1 427.6 524.4 657.5 275.9 191.9 189.7 199.9 172.4 Expenditure 393.5 410.1 452.6 610.1 423.1 134.4 140.6 148.1 164.9 235.1 Balance of payments (in percent of GDP. unless otherwise indicated) Current account 6.5 4.5 7.6 5.7 Exports f.o.b 89.8 89.5 93.4 81.0 Imports f.o.b 78.4 81.6 81.6 74.2 Capital and financial account 1.1 -6.6 -1.8 0.2 Foreign reserves (Billion US$) 89.1 82.9 82.3 79.1 Financial indicators Policy rate (Refinancing rate) 4.5 4.5 4.5 4.5 4.5 Credit growth (y/y) 16.5 16 15.7 17.3 17.5 Source: GSO, MOF, Fiingroup and Haver Analytics 6