Firms more upbeat on Vietnam outlook for coming year: S&P exec
Production in Vietnam continued to rise markedly, and firms were more optimistic in the outlook for the coming year, said Andrew Harker, economics director at S&P Global Market Intelligence.
"Based on the historical relationship between the PMI and official data, the manufacturing sector should continue to make a solid contribution to GDP growth in the third quarter of 2026, with the potential for growth to strengthen further should the international environment improve," Harker wrote in a S&P release on Thursday.
The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) dropped to 51.9 in September from August's reading of 53.3, thereby signalling a smaller improvement in the health of the sector at the end of the third quarter.
While the manufacturing sector remained in growth territory in September, data showed that the international environment limited the pace of expansion. New export orders were down, the war in the Middle East caused further rises in the cost of fuel and oil, and international shipping delays contributed to longer supplier delivery times, S&P Global Market Intelligence stated.
Softer growth of new orders meant that firms were able to keep on top of workloads despite a second successive monthly reduction in employment. Meanwhile, input costs continued to rise markedly, but the rate of output price inflation eased again, in part due to competitive pressures.
Business conditions have now strengthened in each of the past 15 months. A further marked rise in manufacturing production was registered in September, continuing the sequence of expansion which began in May 2025. The rate of growth eased from that seen in August, however.
A further marked increase in purchasing activity was recorded in September as firms secured inputs to help support output growth. The use of materials in the production process meant that stocks of inputs continued to fall.
Manufacturers also expressed a desire to draw down holdings of finished products, and used the prompt shipment of goods to customers to achieve this. In fact, stocks of finished goods decreased at the sharpest pace since the survey began in March 2011.
Expected improvements in market conditions supported confidence that output will rise over the coming year. The planned launch of new products was also behind the optimistic outlook, with sentiment reaching its highest since February.
The Asian Development Bank (ADB) on September 23 raised its forecast for Vietnam’s economic growth in 2026 to 7.8% from 7.2% in July, the highest in ASEAN, but warned that rapid investment and credit growth could amplify financial vulnerabilities and narrow policy space. The bank projected 7.6% growth for 2027, also the highest in ASEAN, up from 7% in July.
Singaporean bank UOB late on September 18 raised its 2026 GDP growth forecast for Vietnam to 8.5%, projecting that growth momentum would continue to be driven by improving domestic demand, investment inflows into the manufacturing and technology sectors, and large-scale infrastructure projects currently underway across the country.
On April 24, the National Assembly, Vietnam's legislature, set a 2026-2030 agenda targeting at least 10% average annual GDP growth.
Source: Thai Ha
Photo: Photo courtesy of Tasetco