Macro Update – April 2026: EARLY INDICATORS OF INFLATIONARY UPSIDE RISK

April 2026 macroeconomic data indicates sustained baseline expansion, underpinned by steady industrial production, solid FDI disbursement, inbound international arrivals, and accelerated public investment. However, structural divergence is increasingly apparent. Relative to March, several constraints have materialized: headline inflation now exceeds core inflation, real consumption growth has moderated, import growth continues to outpace exports, and the manufacturing recovery remains concentrated within select sub-sectors.

• Headline CPI rose 0.84% MoM and 5.46% YoY in April. For the 4M2026 period, average headline CPI expanded 3.99% YoY (up from 3.20% in 4M2025), approaching the National Assembly’s 4.5% target ceiling. Concurrently, average core inflation reached 3.89% YoY, marking an increase from 3.05% during the same period in 2025.
• Nominal retail sales reached VND646.3tn (+12.1% YoY) in April, driving the 4M2026 cumulative figure to VND2,546.6tn (+11.1% YoY, compared to +9.9% in 4M2025). Despite this nominal expansion, real retail sales growth (excluding price effects) moderated to 6.3% YoY in 4M2026, down from 7.7% in 4M2025. This divergence between nominal and real retail metrics suggests some compression in consumer spending capacity.
• IIP advanced 3.0% MoM and 9.9% YoY in April, bringing 4M2026 IIP growth to 9.2% YoY (4M2025: 8.6%). Manufacturing and processing sector remains the primary growth engine, expanding 10.0% YoY in April and 9.9% YoY in 4M2026.
• On the external front, April exports reached US$45.52bn (+21.0% YoY, -2.0% MoM), while imports expanded to US$48.80bn (+32.5% YoY, +3.6% MoM). This generated an April trade deficit of US$3.28bn, pushing the cumulative 4M2026 deficit to US$7.11bn and marking a clear shift from the US$4.3bn surplus recorded in 4M2025.
• Cumulative registered FDI reached US$18.24bn (+32.0% YoY) in 4M2026, driven by a structural divergence in capital flows. Newly registered projects generated US$12.15bn (a 2.2x YoY expansion), while M&A activity contributed US$2.96bn (+61.9% YoY). Conversely, adjusted capital injections from existing projects contracted 51.0% YoY to US$3.13bn. Concurrently, FDI disbursement rose 9.8% YoY to US$7.40bn, representing the highest four-month realization in five years.
• State budget disbursement for public investment reached VND54.8tn (+8.2% YoY) in April. Cumulative 4M2026 disbursement stood at VND187.1tn (+10.4% YoY), achieving 19.7% of the FY2026 plan and outpacing the 16.7% execution rate observed in 4M2025. Fiscal policy remains consolidated, with revenue collection continuing to front-load against expenditure. YTD total revenue reached 44.0% of the annual estimate (+15.2% YoY), while total expenditure stood at 21.2% (+11.6% YoY).

As of April 23, credit growth reached approximately 4.11% YTD, outpacing deposit growth of 2.19% YTD. This widening spread between funding mobilization and aggregate credit demand continues to exert structural pressure on interbank liquidity.

• The State Bank of Vietnam (SBV) managed these liquidity constraints through open market operations (OMO) in April, anchoring outstanding OMO balances near VND300tn. State Treasury deposit auctions and maturity cycles provided the primary liquidity backstop. Outstanding Treasury deposits consistently exceeded VND600tn throughout the month, closing April at an estimated VND670tn.
• Interbank interest rates stabilized at elevated levels relative to USD rates. This positive rate differential, coupled with sustained FDI inflows, absorbed the foreign exchange pressures generated by April’s US$3.3bn trade deficit.
• Looking ahead, deposit and lending rates are projected to remain elevated in 2H2026 relative to FY2025, as the banking system’s funding base continues to lag lending demand. Against this backdrop, we expect the SBV to maintain nominal rates at levels sufficient to anchor exchange rate and inflation expectations. Concurrently, the central bank may introduce targeted macroprudential easing—such as adjusting liquidity coverage requirements or authorizing preferential lending conditions for designated strategic projects—to alleviate specific localized pressures without broadly lowering the rate floor.