Energy Costs Soar, Vietnam’s Economic Growth Slows Below 8% as 'Double-Digit Target' Hits Reality

Vietnam's economic growth slowed in the first quarter as rising energy costs heightened uncertainty. On Saturday, the General Statistics Office of Vietnam announced that Q1 GDP grew 7.83% year-on-year, a slowdown from the 8.46% growth in the previous quarter, but still higher than the market median expectation of 7.6%. Manufacturing remains the core engine of economic growth this quarter, with March exports up approximately 20.1% year-on-year and manufacturing growth reaching 9.73% in the first quarter. Meanwhile, the CPI (Consumer Price Index) rose 4.65% year-on-year in March, while the Vietnamese government's target for this year is to keep inflation growth within 4.5%. The General Statistics Office stated in its announcement: The global situation in the first quarter of 2026 remains complex and volatile, with intensified Middle East conflicts triggering energy price fluctuations, supply chain disruptions, and rising inflation. Middle East Conflict Hits Vietnam's Energy Supply As a manufacturing powerhouse highly dependent on imported energy, Vietnam faces dual pressure from the Middle East conflict through rising fuel prices and tightening supply. To stabilize domestic fuel prices, the Vietnamese government has utilized its emergency energy reserve fund, and Vietnamese airlines have significantly reduced flights due to shortages of aviation kerosene. To ensure energy security, Vietnam has suspended the collection of certain taxes on gasoline, diesel, and aviation fuel, a measure that will continue until April 15. Simultaneously, the government is actively promoting an accelerated transition to electric vehicles and biofuels to reduce its reliance on imported petroleum products. Nguyen Thi Hong, Governor of the State Bank of Vietnam, stated in an article on the central bank's official website last week that Vietnam will not sacrifice macroeconomic stability for short-term growth. Prime Minister Pham Minh Chinh previously warned that global tensions are exerting multiple pressures on inflation, interest rates, and energy supplies, which could have a chain effect on production capacity and business operations. Manufacturing and Exports Support the Fundamentals of Growth Despite the increasingly complex external environment, Vietnam's trade data remains bright. Data from the General Statistics Office of Vietnam shows that Vietnam's trade surplus with the U.S. reached $33.9 billion in the first quarter, a year-on-year increase of 24.2%. Last year, Vietnam was the third-largest source of the U.S. trade deficit, trailing only China and Mexico. In January this year, Vietnam's single-month trade deficit with the U.S. temporarily surpassed both countries to rank first. With exports growing by approximately 20.1% year-on-year in March and manufacturing growth reaching 9.73% in the first quarter, these factors continue to serve as the main drivers for the overall economy. Meanwhile, imports climbed 27.8% year-on-year in March, indicating that domestic demand and the need for production inputs remain robust. To achieve the macroeconomic goal of sustained 10% economic growth, the Vietnamese government is vigorously advancing public investment plans, with hundreds of infrastructure projects proceeding simultaneously. Among them, the Long Thanh International Airport, located in the suburbs of Ho Chi Minh City, is a key flagship project. Prime Minister Pham Minh Chinh is pushing for the project to become operational in the fourth quarter of this year.