Vietnam: How does strong growth complicate the inflation fight? – DBS

Strong electronics shipments, resilient household spending and tourism continue to support Vietnam’s economic activity. Against this backdrop, DBS Group Research expects exports and retail sales to remain robust in October 2026, with headline inflation hovering around 5%, above the 4.5% target. As authorities aim for economic growth of at least 10%, elevated transport, energy, food and material costs complicate the policy outlook.

Can Vietnam balance robust demand with elevated inflation?

"We expect Vietnam’s October 2026 goods exports and retail sales to remain robust at 42.0% yoy and 14.0% yoy year-to-date, respectively, while headline inflation is likely to stay elevated at around 5.0% yoy."

"Exports have continued to be supported by strong electronics and machinery shipments amid a favourable technology cycle with spillovers from robust artificial intelligence-related demand."

"Retail sales were likely bolstered by firm household spending, supported by favourable labour market conditions, and continued strength in tourism. "

"Headline inflation has remained elevated and above the central bank’s target of 4.5% for the year, driven by price pressures from transport and energy, food, as well as material costs. This poses a challenge for policymakers as they seek to balance inflation risks against ambitions of achieving at least 10% economic growth this year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)