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Macro Update – August 2026: STRONGER GROWTH, UNEVEN TRANSMISSION
04/09/2026 - 2:30:20 CH- August data strengthen our view that Vietnam will maintain strong growth through 3Q26, but the recovery remains uneven across the economy. Industrial production, realized FDI and public investment all improved, while the Vietnam Manufacturing PMI rose to 53.3. The main support continues to come from manufacturing and investment rather than a clear acceleration in household consumption.
- Production indicators were the strongest part of the August data. IIP rose 14.4% YoY in August and 11.9% in 8M26, while manufacturing increased 12.5% YTD. Realized FDI reached US$17.25bn (+12.0% YoY), with manufacturing accounting for 82.6%, and state-budget investment rose 24.1% YoY in August. PMI data also showed stronger output and total new orders, although new export orders declined again and employment weakened, suggesting the improvement is still concentrated in selected areas rather than spreading evenly across manufacturers.
- Consumer demand remains resilient but has not accelerated materially after adjusting for inflation. Retail sales increased 13.3% YoY in 8M26, while real growth was 7.6%, almost unchanged from 7.5% a year earlier. Trade conditions improved more clearly in August: the monthly deficit narrowed to only US$0.11bn, the smallest deficit of 2026. The more relevant change remains the product mix, with electronics, machinery and phones growing much faster than apparel and footwear.
- Inflation moved higher again as the refined-fuel shock returned. CPI rose 0.47% MoM and 4.89% YoY, with transport contributing 0.41ppt to the monthly increase as diesel and gasoline prices rose 22.15% and 9.53%. Core CPI increased only 0.11% MoM and 4.55% YoY, indicating that the fuel shock has not yet spread widely across non-energy goods and services. This happened while temporary tax relief for gasoline, diesel and related fuels remained in force through end-September, showing that the domestic tax buffer could only partially offset pressure from tight refined-product markets.
- Financial conditions remain an important constraint on the transmission of policy support. The SBV kept outstanding OMO at roughly VND180–200tn for most of August, while State Treasury deposits remained around VND700tn, helping banks manage short-term liquidity. Even so, overnight interbank rates stayed relatively high through much of the month before falling below 2% only in the final week, while deposit and lending rates have risen materially from end-2025. The policy direction therefore remains targeted: public investment, liquidity support, prudential adjustments and capital-market reforms are being used to sustain growth without a broad reduction in interest rates.
