Vietnam Bets on Domestic Consumption to Sustain Economic Growth in 2026

Vietnam's economic growth in 2026 will hinge largely on the recovery of domestic consumption, effective policy implementation and the continued contribution of public investment, amid mounting uncertainty in the global economic outlook, experts said at a recent webinar.

Speaking at the Vietnam Economic Outlook for 2026 webinar on January 14, Fulbright School of Public Policy and Management senior lecturer Nguyen Xuan Thanh described domestic consumption as the biggest unknown factor shaping the country's growth prospects next year. He noted that while there are signs of recovery in consumer confidence and demand, lingering risks remain.

Thanh said the trajectory of domestic consumption will depend heavily on public confidence, though several encouraging signals have emerged.

Employment in industrial zones has shown improvement, informal service-sector jobs have rebounded alongside the recovery in tourism, and income levels among the upper-middle class have become more stable.

Rising property prices, while making home ownership more challenging for some, have helped boost confidence among existing homeowners by increasing household asset values.

He added that savings depleted during the Covid-19 period have largely been rebuilt but stressed that further gains in consumer confidence will require strong institutional reforms and effective state policies. Measures such as increased social welfare spending, including tuition fee exemptions and broader health insurance coverage, could significantly encourage household spending if implemented decisively.

Drawing comparisons with China, Thanh said limited social welfare coverage often prompts households to adopt a cautious approach and rein in spending. In contrast, a clear government commitment to social security could act as a catalyst for stronger domestic consumption in Vietnam.

Public investment is expected to remain one of the economy's main growth drivers in 2026, although its pace is unlikely to match the surge seen in 2025.

Thanh explained that disbursement pressures were particularly high last year as it marked the end of the current government term. Under the state budget plan approved by the National Assembly, public investment capital in 2026 is projected to rise by 10.3% year on year, reaching nearly 8% of gross domestic product — among the highest levels in recent years.

Exports will also play a vital role in sustaining employment and incomes, particularly for workers in industrial zones. However, export growth is expected to face headwinds.

The government has set a target of around 8% export growth in 2026, significantly lower than the 17% recorded in 2025. This goal depends largely on exports to the United States remaining stable and shipments to other markets maintaining last year's momentum.

Echoing the importance of public investment, Dinh Hong Ky, chairman of the HCM City Green Business Association, said infrastructure spending is likely to remain robust in 2026. He pointed to several major projects launched since early this year in southern Vietnam, including metro lines, an underground link connecting HCM City to Can Gio, the Vung Tau sea-crossing bridge, Long Thanh International Airport and multiple expressways.

Ky noted that once large-scale infrastructure projects move into the implementation phase, progress tends to be sustained. As a result, public investment in 2026 could potentially exceed last year's level and continue to serve as a key engine of Vietnam's economic growth, he added.