Growth navigates new uncertainties

Vietnam’s macro picture in June presented a nuanced story. On the external front, IIP persisted, but PMI softened from fewer new orders. This divergence suggests IIP’s strength was largely due to front-loaded shipments ahead of tariff actions. Domestically, retail sales slowed as the impact of preceding holidays receded, compounded by short-lived supply disruptions for smaller businesses facing origin scrutiny and updated tax requirements. Looking ahead, recent updates on the trade deal with the U.S. suggest a favorable outcome, potentially allowing Vietnamese exporters to expand their market share by effectively leveraging tariff advantages. However, as the front-loading effect fades, export growth is expected to slow. As a result, the country’s growth momentum will likely shift back to domestic demand and private sector activity.