HCM CITY — Việt Nam's economy remains on track for strong growth this year, underpinned by resilient manufacturing, record foreign investment, and supportive government policies, but it will increasingly depend on effective public spending and administrative reforms, according to securities brokerage SSI Research.

In its July Market Review & Outlook, SSI Research forecast GDP growth of 8.5-9 per cent in 2026 after the economy expanded by 8.18 per cent in the first half and second-quarter growth accelerating to 8.39 per cent, among the highest in the region.

Growth was driven by manufacturing, which expanded at 9.81 per cent, while manufacturing rose by 10.23 per cent during the half.

Foreign investment remained another bright spot. FDI jumped by 61 per cent year-on-year to US$34.7 billion.

Despite the strong momentum, SSI Research said the investment-led growth model is becoming more demanding to run.

The goods trade balance swung to a $16.65 billion deficit, inflationary pressures broadened through the second quarter and banking credit grew faster than deposits.

Foreign exchange reserves, at around $87.6 billion, was relatively thin for the country's expanding import base.

SSI said the Government has also shifted its focus from setting ambitious growth targets to improving policy execution, with public investment disbursement becoming the main policy lever for the second half of the year.

"Việt Nam is not short of growth momentum; it is short of execution bandwidth.

"The 2H26 outcome will depend on external conversion (imports becoming exports) and internal circulation (spending becoming deposits and executed projects)."

To achieve the Government's growth target of more than 10 per cent, the economy would need to expand by 11.9 per cent in the second half, it said.

Achieving that growth would depend less on new policy stimulus than on how quickly approved capital, projects, and funding are translated into actual economic activity, it warned.

It said 2026 would be a "positioning window" for investors and 2027 the "validation window" as policy reforms and investment projects begin to deliver more visible results.

 

On the equity market, SSI Research maintained a neutral outlook for the market, saying resilient economic fundamentals, attractive valuations, and healthy corporate earnings should continue to support selective investment opportunities.

The VN-Index ended June at 1,860 points, little changed from the previous month but up 4.23 per cent since the start of the year. But the gains were concentrated in a handful of large-cap stocks, particularly those in the Vingroup ecosystem.

Otherwise, the benchmark index was down 1.7 per cent.

Market liquidity weakened considerably, with average daily trading value on the Hochiminh Stock Exchange falling by 32 per cent month-on-month to VNĐ15 trillion, the lowest for the year.

Foreign investors extended their selling spree with net sales of VNĐ15.3 trillion in June and VNĐ80.3 trillion in the first six months.

Nevertheless, SSI Research said, corporate earnings continue to provide an important anchor for the market.

Second-quarter earnings are expected to remain strong across banking, retail, construction materials, rubber, and food and beverages, while consumer and technology companies are benefiting from market-share gains and replacement-cycle demand.

But fertiliser producers and midstream oil and gas companies could face earnings pressure following the recent sharp decline in oil prices.

Valuations also remain supportive. The market is trading at a forward 2026 price-to-earnings ratio of just over 10 times, close to its long-term average, providing room for selective positioning despite the index's gains earlier this year.

The report also highlighted Việt Nam's market-upgrade story as an important medium-term catalyst.

Passive inflows linked to FTSE Russell's emerging market upgrade are expected to begin in the third quarter, with the first tranche anticipated in September. Meanwhile, MSCI has taken a more constructive view of Việt Nam's reform progress, although 2027 remains a more realistic timeline for any further upgrade, subject to continued implementation of market reforms. — BIZHUB