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Riding on the demographic dividend of nearly 100 million people and the growing strength of its rising middle class, Vietnam’s economic performance in recent years has been remarkably impressive. Benefiting from the strong momentum driven by the service sector and industrial production, Vietnam’s economic growth rate reached 7.1% last year, surpassing the official target of 6.5% and exceeding the 5.05% growth in 2023. The current account surplus also surged significantly to $28 billion. In the first half of this year, Vietnam’s economic growth rate hit 7.5%, outpacing countries like Indonesia, Malaysia, and Thailand, making it the fastest-growing economy in Southeast Asia. Despite facing global geopolitical and trade uncertainties, Vietnam’s economic growth remains robust. The Vietnamese government originally expected GDP growth to climb further to between 8.3% and 8.5% this year. However, due to the impact of reciprocal tariffs imposed by the United States, the World Bank has downgraded Vietnam’s GDP growth forecast for this year to 6.6%, with a further decline to 6.1% projected for next year. Nevertheless, growth is expected to rebound to 6.5% by 2027. The International Monetary Fund (IMF) is also optimistic, predicting that Vietnam will surpass Thailand after 2028 to become the second-largest economy in Southeast Asia.

Vietnam’s Economic Advantage

In April, Vietnam was once hit with a hefty 46% retaliatory tariff imposed by Trump. Through flexible policies, the Vietnamese government reached a tariff trade agreement with the United States on August 2nd, following the UK and leading all Asia-Pacific markets—a milestone with significant implications. Vietnam will pay a 20% tariff on all goods exported to the U.S., while transshipped goods will be subject to a 40% tariff. Vietnam will be “fully open” to the U.S., allowing American products to be sold throughout Vietnam duty-free. Economists estimate that the 20% tariff could cause Vietnam’s GDP growth to decline by 1.3% to 1.5%. Although Vietnam’s current tariff rates are similar to those of other Southeast Asian competitors, it still maintains certain advantages thanks to its cost competitiveness, mature industrial base, and geographic proximity to China.

Although Vietnam’s export trade focus remains primarily on the United States, and the impact of tariffs cannot be underestimated, Vietnam still holds significant advantages as companies restructure their supply chains in Asia. In particular, Vietnam has become an important base for American companies’ “China Plus One” diversification strategy. As manufacturers shift production away from China, Vietnam has emerged as one of the biggest winners of the US-China trade war during President Trump’s first term. Global companies choose Vietnam not only because of its low costs but also due to its increasingly professional investment environment. Vietnam is actively transitioning from low-value manufacturing to high value-added industries while simultaneously improving the skills of its domestic workforce.

In addition, amid the intensifying competition of the US-China trade war, Vietnam remains a key country for China’s active investment and economic cooperation efforts. During his Southeast Asia trip in April this year, Chinese President Xi Jinping’s first stop was a meeting with General Secretary of the Communist Party of Vietnam, Nguyen Phu Trong, to discuss trade facilitation and e-commerce, among other topics. They signed 45 cooperation agreements covering the expansion of bilateral trade, improving customs clearance efficiency, promoting the “single window” system, and mutual recognition of AEO (Authorized Economic Operator) certified enterprises. In the first half of this year, investment commitments from Chinese and Hong Kong companies in Vietnam increased by 23% year-on-year to $3.56 billion, showing no signs of decline.

Vietnam Real Estate Market Rebound

Benefiting from the booming financial and real estate markets, the Vietnamese stock market once reached its peak in 2022. However, after the Vietnamese government implemented a series of anti-corruption financial policies and launched a major overhaul of the real estate market, the stock market began to decline sharply, dropping by more than 60% at one point. After several years of stagnation, the real estate market has reignited bullish momentum. This revival is mainly due to the Vietnamese National Assembly’s consolidation of the country’s administrative divisions from 63 to 34, effective July 1 of this year, establishing a more efficient “two-tier local government system.” By streamlining the bureaucracy, this reform aims to increase transparency, administrative efficiency, and provide a clearer long-term urban vision. The merged provinces can now promote comprehensive urban planning that transcends the old administrative boundaries, which is a crucial positive development for Vietnam’s real estate sector. According to statistics from the Foreign Investment Agency of Vietnam’s Ministry of Finance, foreign direct investment (FDI) in the real estate industry more than doubled in the first half of this year, reaching $5.17 billion, accounting for 24% of the country’s total FDI of $21.5 billion. Meanwhile, real estate loan balances surged to 3,180 trillion Vietnamese dong, with an annual growth rate of 140%, indicating a significant rebound in market confidence toward Vietnamese real estate.

Vietnam’s Economic Structure Shift

Vietnam’s past economic structure was primarily based on textile and agricultural product exports. In recent years, with the global electronics industry supply chain shifting, Vietnam has rapidly emerged as a new hotspot for the global electronics industry layout. It is now the 12th largest electronics product exporter in the world and the 3rd largest in ASEAN. According to statistics, Vietnam’s total export value in the first half of this year reached $219.8 billion, a year-on-year increase of 14.5%. Among these, the export value of electronic products and components reached $38.4 billion, up 40% year-on-year, accounting for 17% of Vietnam’s total exports in the first half of the year, becoming the main core commodity of Vietnam’s export trade. Specifically, Vietnam’s exports to the United States totaled $18.5 billion, up 65% year-on-year; exports to China reached $8.2 billion, up 34.1%; exports to Hong Kong were $4.7 billion, up 16.8%; exports to the European Union reached $4.61 billion, up 12.5%; and exports to South Korea totaled $4.12 billion, up 59%. These export trade figures not only show no signs of weakening but are instead thriving.

Vietnam’s New Challenge

However, as the education level of the population gradually improves and the demographic dividend peak has passed, Vietnam’s labor shortage problem has become increasingly severe. In addition to challenges in the economic structure, power shortages are another major obstacle restricting the development of Vietnam’s manufacturing industry. According to statistics, Vietnam’s power generation in the first half of this year only grew slightly by 3%, but the forecasted annual electricity demand growth for this year is as high as 10% to 15%. In some regions of Vietnam, the power supply gap reaches as high as 26% to 30%, resulting in reports of power rationing due to insufficient electricity in many areas, seriously affecting the stability of the supply chain. Ultimately, this is mainly because Vietnam, in response to international environmental trends, has decided not to build new coal power plants after 2030. Additionally, the government strictly controls electricity prices, causing power companies to suffer heavy losses and making it difficult to attract investment for expanding new power plants. Furthermore, the transmission capacity between the northern and southern power grids in Vietnam is severely insufficient, leading to surplus electricity in the south while the north often faces power shortages.

Vietnam Equity Funds Performance Analysis

As of September 18, the Vietnam index has surged 31.5% year-to-date, not only shaking off the shadow of U.S. equivalent tariffs since April but also repeatedly hitting new highs. Currently, there are five registered Vietnam equity funds available for sale domestically (including one ETF), all denominated in New Taiwan dollars. Vietnam equity funds have posted an average return of 16.6% year-to-date, with an average return soaring 27.2% over the past three months, rising 13.3% over the past six months, and increasing 10.1% over the past year.

Table 1: Performance of Equity Vietnam Funds RFS in Taiwan

(Click on image to enlarge)

Source：LSEG Lipper, as of 2025/9/18, in TWD

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