Amid global oil price volatility caused by the conflict in the Middle East and uncertainty surrounding U.S. trade tariffs, Viet Nam recorded year-on-year GDP growth of 7.83% in the first quarter of 2026. The figure exceeded the 7.07% recorded in Q1 2025 and marked the highest first-quarter growth rate in Viet Nam’s history.
The contrast is quite striking. During the same quarter, most economies in the region slowed down. Malaysia grew by 5.3%, Singapore by 4.6%, while Thailand and the Philippines each recorded growth of only 2.8%.
Among these countries, only Indonesia and Thailand exceeded market expectations. Indonesia grew by 5.61%, surpassing the analyst consensus of 5.40%, while Thailand rose from 2.5% in Q4 2025 and exceeded the projected 2.2%. Even so, both remained well below Viet Nam’s performance.
The Philippines was the hardest hit. Its 2.8% growth rate was the lowest in five years and fell short of the 3.5% consensus forecast, as April inflation reached its highest level in three years due to rising fuel prices.
What Drives Economic Growth
Viet Nam’s industrial and construction sector grew by 8.92% in Q1 2026, contributing 44.08% of the economy’s total gross value added. This growth was driven primarily by electronics exports.
Exports of electronics, computers, and components grew by 45.5% year-on-year to reach US$30.7 billion in Q1 2026, more than double the growth rate of total exports, which stood at 19.1%.
This is not a new phenomenon, but a continuation of a long-term structural trend. Foreign companies operating in Viet Nam account for around 98% of the country’s total electronics exports, with exports valued at US$126.5 billion, or one-third of total national export earnings, in 2024.
Companies such as Samsung Electronics, Intel, and LG Electronics have long made Viet Nam a major production base in Southeast Asia.
FDI Surges as Investor Confidence Remains Strong
In the first three months of 2026, Viet Nam attracted more than US$15.2 billion in total foreign direct investment (FDI), up 42.9% year-on-year. Realized FDI disbursements reached US$5.4 billion. These figures far exceeded the expectations of many international financial institutions.
The surge in capital inflows was driven largely by several large-scale projects in manufacturing, high technology, and energy. Outside of these projects, overall FDI growth would have been more moderate, indicating that investment performance still depends significantly on large-capacity investments.
Domestic Consumption and Services Also Expanded
Viet Nam’s growth in Q1 2026 was not supported by exports alone. Final consumption grew by 8.45% year-on-year, while the services sector expanded by 8.18%. International tourist arrivals reached 6.76 million in the first quarter, the highest figure ever recorded for that period.
Growth that is no longer reliant solely on exports and manufacturing, but is increasingly supported by services and domestic demand, signals that Viet Nam’s expansion is resting on a stronger foundation. At a time when neighboring countries are under pressure from rising imported energy prices, Viet Nam has remained relatively protected because its strong export position has helped keep external balances under control.
Why Can Viet Nam Do It While Others Cannot?
Part of the answer lies in Viet Nam’s import structure. Around 94.1% of the country’s imports consist of raw materials and machinery used for production rather than consumer goods. As a result, when imports rise, it is generally a sign that factories are expanding, not that purchasing power is being depleted.
Domestic consumption grew by 8.45% year-on-year, while the services sector expanded by 8.18%. International tourist arrivals reached 6.76 million in Q1 2026, the highest figure ever recorded for that period. In other words, Viet Nam’s growth is not dependent on a single driver.
On the other hand, the World Bank has identified Thailand as one of the economies most vulnerable to global energy shocks due to its heavy dependence on imported energy.
Meanwhile, the Philippines recorded its highest inflation rate in three years in April 2026, while household consumption slowed and investment weakened as fuel prices surged.
More broadly, the same pressures are being felt across the region. However, not every country has a manufacturing export base strong enough to absorb them.
