GDP Growth and Economic Challenges
In the first half of 2026, Vietnam’s GDP grew by 8.18%, marking the highest increase in 16 years, although it fell short of the 10% target. General Secretary and President To Lam acknowledged this achievement while highlighting ongoing institutional limitations, growth quality issues, and resource mobilization challenges. The OECD forecasts Vietnam’s growth at 6.2% for 2026 and 5.8% for 2027.
Export Performance
Vietnam’s export value reached a record of approximately 475 billion USD in 2025, with foreign direct investment (FDI) accounting for 77.3% of total exports. However, domestic enterprises saw a decline in their export share, raising concerns about their competitiveness. The trade surplus with the US contrasts sharply with a record trade deficit with China, as US officials view Vietnam as a transshipment point for Chinese goods.
Labor Market Issues
Vietnam’s GDP per capita in 2025 was estimated at 5,026 USD, a level where many developing economies begin to stagnate. The skilled labor force stood at only 29.2%, leading to a shortage of qualified workers for development goals set for 2026-2030. The reliance on foreign technology and management in high-value exports remains a significant challenge for local businesses.
Low Localization Rate
In the first half of 2026, FDI from China significantly decreased, while investments from Singapore and South Korea increased. Despite attracting substantial foreign investment, the connection between FDI and local firms remains weak, with a low localization rate persisting across various industries. The article suggests that while Vietnam has benefited from the “China + 1” strategy, the market may soon become saturated, necessitating a shift towards enhancing domestic capabilities rather than relying on imports.
