Vietnam keeps growth target at 8% despite tariff challenges

Vietnam’s prime minister said the nation’s economic growth target remains unchanged this year despite the many challenges it faces, as the threat of US tariffs creates uncertainty for exporters and businesses.

"The global economy saw unprecedented movements in the past months, putting pressure on the management of the macro-economy,” Pham Minh Chinh said, addressing the National Assembly in Hanoi on Monday. The government wants to "turn risks into opportunities,” Chinh added.

Still, Chinh reiterated that the government will keep its target of at least 8% growth this year with the aim of reaching double-digits in the coming years. Economic expansion slowed to 6.93% in the first quarter from 7.55% in the last three months of 2024.

Vietnam will hold its first round of trade negotiations with the US on Wednesday as it aims to "secure balanced trade, while ensuring not to hurt other markets,” Chinh said, as he vowed the country will work to combat trade fraud. 

The Southeast Asian nation, whose exports to the US account for around 30% of its GDP, is seeking to avert a 46% tariff that would deal a serious blow to growth prospects. At the same time, the country is striving to balance relations with its largest trading partner, China, which has warned nations against cutting deals at Beijing’s expense.

The US tariffs are threatening global supply chains and hurting the global economy, Chinh said. In a sign of the strain on factories, the S&P Global manufacturing purchasing managers’ index for Vietnam showed a contraction in activity in April to its lowest reading since May 2023.

Vietnam will continue to manage the currency and interest rates in a flexible manner to ensure demand for loans that will help support growth, Chinh told parliament. The government will also boost development of high-speed railway and nuclear power plants, and seek to attract more foreign tech investment, including in the semiconductor and AI sectors, he said. 

Vietnam is also "pushing for military modernization, developing military science and technology, producing weapons with high-tech equipment,” Chinh said, without giving further details.

First-quarter GDP growth was slower than targeted, putting the government under pressure to meet the 8% growth target for the year, according to Phan Van Mai, head of the National Assembly’s economic and financial committee.

The government should continue to curb inflation, lower lending interest rates to support businesses while working on measures to respond to risks of a possible trade war, Mai said.

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