Vietnam Q1 growth slows as costlier Middle East energy tests 2026 target

Vietnam's economy slowed in the first quarter from the three months prior, data showed on Saturday, as heavy exposure to Middle Eastern oil imports boosted inflation, presenting a challenge in reaching an annual growth target, authorities said.

Gross domestic product grew 7.83 per cent in the quarter from January to March over the corresponding period a year earlier, but below 8.46 per cent in the fourth quarter, the National Statistics Office said in a report.

"The pressure from rising input costs and energy prices on inflation remains, posing challenges for economic governance," the NSO added on Saturday (April 4).

Consumer prices rose 4.65 per cent in March on the year, driven by a surge of 10.81 per cent in transport costs, it said, accelerating from a rise of 3.35 per cent in February.

This year's growth target of at least 10 per cent is under pressure as the Southeast Asian economy imports more than 80 per cent of crude oil supplies from the Middle East, where the Iran war, now in its sixth week, has disrupted shipments.

"Entering the second quarter, Vietnam's socio-economic situation continues to face obstacles, and meeting the 2026 growth target remains a big challenge," said NSO Director Nguyen Thi Huong.

Rising fuel prices have spurred Vietnamese airlines to scale back operations and government efforts to cut costs, such as reducing taxes on fuel, subsidising prices and encouraging remote work to reduce consumption.

Growth was up from the 7.05 per cent on-year expansion of the first quarter of 2025.

Exports rose 20.1 per cent in March to $46.44 billion from a year earlier, the report said. March industrial production rose 6.9 per cent from a year earlier, but slowed from growth of 8.6 per cent in the corresponding month last year.

The war has driven up gasoline prices 21 per cent and diesel prices by 84 per cent in Vietnam, data from top fuel trader Petrolimex shows.

Senior officials have sought alternative oil sources from suppliers such as Gulf states, Japan and South Korea.

Vietnam's March imports rose 27.8 per cent to $47.11 billion, for a monthly trade deficit of $670 million.

For the first quarter, exports rose 19.1 per cent to $122.93 billion and imports were up 27.0 per cent at $126.57 billion, for a deficit of $3.64 billion.

Quarterly retail sales rose 10.9 per cent.

Foreign investment inflows in the first quarter rose 9.1 per cent on the year to $5.41 billion, the NSO said, while pledges, which indicate the size of future inflows, rose 42.9 per cent to $15.2 billion.

Vietnam will retain its target of 10 per cent growth this year despite challenges, Prime Minister Pham Minh Chinh said on Saturday, promising steps such as greater public investment and diversification of export markets and supply chains.

"Our country still faces limitations, shortcomings, and many difficulties, challenges and risks related to the pressure of macroeconomic management and ensuring energy security," Chinh told a cabinet meeting.