Economic Factors and Themes to Be Mindful Of
•February 20, 2026
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Why It Matters
The macro‑policy split reshapes capital flows worldwide, while Vietnam’s policy mix could determine its ability to sustain high‑growth and attract foreign investment.
Key Takeaways
- •Central banks diverge: Fed cuts, BoE slows, ECB neutral.
- •Geopolitical tensions raise safe‑haven demand, boosting dollar volatility.
- •Vietnam public investment to grow 9‑10% supporting infrastructure.
- •Credit policy shifting from real estate to productive sectors.
- •Construction, logistics, consumer retail, banking, renewables poised for growth.
Pulse Analysis
The 2026 investment landscape is defined by a fragmented monetary policy environment. The U.S. Federal Reserve and the Bank of England are still on a rate‑cutting trajectory, albeit at a slower pace, while the European Central Bank has settled into a neutral stance and the Bank of Japan is moving toward gradual tightening. This divergence creates arbitrage opportunities but also amplifies currency volatility, especially as the U.S. dollar’s dominance erodes amid record fiscal deficits. Investors are likely to favor safe‑haven assets and currencies less exposed to policy uncertainty, reshaping global capital allocation.
Vietnam stands out as a growth engine amid this turbulence. The 14th National Party Congress has cemented political stability, allowing policymakers to focus on a bold GDP target above 10% for 2026. Public investment is projected to expand by 9‑10%, funding high‑speed rail, urban transit, and energy projects that improve connectivity and alleviate urban housing pressure. Simultaneously, the State Bank of Vietnam is recalibrating credit flows, steering financing away from speculative real‑estate loans toward productive manufacturing and services, a shift essential to counter ageing demographics and rising living costs.
Sector‑specific outlooks are equally compelling. Construction firms will benefit from continued infrastructure spend, while industrial real‑estate and logistics assets—especially in northern parks with lower land costs—offer attractive valuations. Consumer retail is set to gain from rising incomes and expanding rural markets, and banks can expect 15‑20% profit growth despite margin pressure. Finally, the power sector is poised for a resurgence as clear renewable‑energy pricing mechanisms unlock delayed projects. Together, these dynamics make Vietnam a focal point for investors seeking diversified exposure in a volatile global economy.
Economic factors and themes to be mindful of
With the global macro environment widely expected to remain highly volatile, what are the biggest themes investors should keep an eye on in 2026?
Trinh Ha
The first major theme is the increasingly clear divergence among the world’s leading central banks. Some, such as the US Federal Reserve and the Bank of England, are continuing their rate-cutting cycles, although the pace is likely to slow as they move closer to their targets. Meanwhile, the European Central Bank has effectively reached what can be considered a long-term neutral interest rate zone.
In contrast, the Bank of Japan is continuing its policy normalisation, with the objective of gradually raising interest rates and maintaining a stable, positive inflation environment. In this context, VND is expected to face relatively limited external pressure in the year ahead.
That said, the more unpredictable factor will come from geopolitics. 2026 is still expected to be a year of significant turbulence, much of it originating from the United States. Escalating tensions linked to Greenland, Venezuela, Iran, and even Canada suggest that Washington’s relationships with close allies are also becoming increasingly concerning. This points to a continuation of heightened volatility, which in turn means safe-haven flows are likely to remain on the rise.
Another important development is the noticeable decline in the dominance of the US dollar. Challenges are emerging not only from major emerging markets, but also from within the US economy itself. Persistent fiscal deficits have pushed the US debt-to-GDP ratio to record highs, visibly weakening the government’s fiscal position. This will remain a key variable shaping global capital flows and investor sentiment.
Turning to the domestic picture, what are the key foundations that could help Vietnam sustain a high-growth trajectory in the 2026–2030 period?
The most fundamental factor is institutional stability. The 14th National Party Congress helped to shape a more stable political environment for the next five years. This provides the government with stronger conditions to focus on economic growth, supported by a longer-term vision aimed at helping Vietnam escape the middle-income trap.
However, alongside these opportunities, Vietnam is also facing a number of pressing challenges. The economy is under growing pressure from ageing demographics, as well as rising living costs, particularly driven by high real estate prices. At the same time, traditional advantages such as abundant labour and competitive investment costs are gradually weakening in the race to attract foreign investment. As a result, Vietnam needs a more structural shift to strengthen its internal capacity, accelerate technological development, and raise labour productivity.
In terms of growth targets, Vietnam is continuing to pursue an ambitious GDP goal of above 10 per cent in 2026. Achieving this will require a coordinated mix of both fiscal and monetary policies, with maintaining relatively low interest rates playing a key role in supporting business activity and stimulating stronger consumption.
Public investment and credit management are often seen as two critical policy pillars. Could you elaborate on how these factors may influence the economy and the market in 2026?
On the fiscal side, public investment disbursement in 2026 is expected to continue expanding at around 9–10 per cent, supported by a series of infrastructure and energy projects that were already launched in 2025. In addition, major projects such as high-speed rail and urban railway systems are expected to begin construction in 2026, creating sustained growth momentum over the next three to five years.
What stands out recently is that institutional and procedural reforms have accelerated the rollout of new projects, while long-standing delays in older projects are also being resolved more decisively. As a result, state budget disbursement has improved markedly. These infrastructure projects help more remote areas benefit from better connectivity, thereby attracting stronger investment inflows.
Infrastructure development also contributes to easing population pressure in the inner areas of major cities, where housing price inflation has become a major concern. As connectivity improves, rural areas are expected to gain more access to better-paying job opportunities, encouraging labour to return to these regions. This is a longer-term solution to overheating real estate prices in large cities, alongside other supportive measures for the property market.
On the monetary policy front, Vietnam is entering the early phase of a strong growth cycle, so the rise in interest rates in late 2025 was not unexpected, and rates may find it difficult to return to previous lows.
As the economy gains momentum, the State Bank of Vietnam will not need to deploy aggressive monetary stimulus. Instead, it is likely to focus on steering credit into sectors that support long-term growth, such as productive and business activities, rather than allowing capital to flow excessively into real estate as seen in 2025.
It is worth emphasising that real estate credit in 2025 rose by around 35 per cent, far outpacing overall credit growth of more than 19 per cent across the economy. Therefore, the central bank’s early-year guidance for 2026 reflects strong control. The aim is to prevent hot money from flooding into property, redirect capital towards real economic activity, and avoid distorting growth figures or fuelling a real estate bubble.
Against the backdrop of recovering manufacturing activity, trade stabilisation, and expectations of foreign inflows returning, which sectors look most promising in 2026, and what should investors be mindful of?
Business and manufacturing activity in 2026 is expected to improve further, as the manufacturing Purchasing Managers’ Index has remained in expansion territory for several consecutive months. After major tariff-related disruptions, conditions have started to stabilise. Notably, the 20 per cent tariff applied to Vietnamese goods is relatively low compared to the average of around 26 per cent for other countries, particularly China. This should encourage more capital flows and export orders to shift towards Vietnam.
Vietnam remains a key destination for supply chain relocation away from China, but it will be important to prioritise projects with higher value-added content and a greater proportion of production carried out domestically, in order to lift the economy’s value-added contribution.
In terms of foreign flows, the outlook for a return of overseas investors is relatively constructive, as the yield gap between Vietnam and global markets narrows when global rate-cutting cycles approach their end. In addition, a potential market upgrade this year could trigger $1.5-2 billion in fresh inflows into the market.
The exchange rate is also expected to face less pressure this year, as the tariff impact fades following a significant depreciation in 2025, even though the US dollar has fallen by more than 10 per cent against other major currencies.
As for sectors, the first is construction, as the continued push in public investment to support high growth targets should allow contractors and building materials suppliers to remain clear beneficiaries.
The second is industrial real estate and logistics. Capital inflows began returning from the fourth quarter after slowing earlier due to tariff uncertainty. Valuations, measured by price-to-book ratios, have fallen to levels meaningfully below the five-year average. Northern industrial parks remain more attractive thanks to their strategic proximity to China, smoother supply chain relocation dynamics, and land prices more than 20 per cent lower than in the south, despite better infrastructure.
The third factor is consumer and retail. Following a year of strong GDP growth and another ambitious target ahead, consumer confidence is expected to strengthen further as both current and future incomes improve. Modern retail formats such as supermarkets and pharmacy chains are likely to continue performing well, supported by stronger brand recognition and better pricing acceptance. In particular, expansion into rural areas is beginning to show results, as incomes in these regions are improving and are expected to keep rising.
The fourth is the banking sector, where profit growth could still reach 15–20 per cent in 2026 as the economy expands and credit demand rises, given Vietnam’s continued reliance on credit to support growth. However, net interest margin pressure is likely to persist, as liquidity conditions may tighten and deposit rates could remain higher than in 2025, particularly for smaller private banks. State-owned banks are expected to face less pressure.
The fifth aspect is power, with 2026 seen as a pivotal year for the start of a new growth phase. Policy frameworks for renewable energy pricing have been completed, and new pricing mechanisms for renewables and liquefied natural gas power have been issued, enabling investors to restart previously delayed projects and move forward with new ones, as legal clarity and pricing structures are now in place.
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