Despite potential challenges from tariff obstacles, Vietnam's economic resilience is anticipated to persist, according to the Asian Development Bank.
The Asian Development Bank (ADB) has released its Asian Development Outlook (ADO) July 2025 report, which highlights potential risks to the region's economic growth, including tariff pressures and geopolitical tensions.
According to the report, tariff pressures, particularly from a recent trade agreement with the US imposing significantly higher tariffs on Vietnamese exports, are expected to reduce demand and slow Vietnam's economic growth in 2025 and 2026. As a result, the ADB has revised Vietnam's GDP growth projection down to 6.3% in 2025 and 6.0% in 2026, marking a decrease of 0.3 and 0.5 percentage points respectively from previous forecasts.
The trade deal with the US, announced in early July 2025, imposes gradually increasing US tariffs on exports from Vietnam. The ADB has also highlighted a worse-than-expected deterioration in the property market of the People's Republic of China (PRC) as a risk.
Despite these challenges, the ADB notes that Vietnam's economy is likely to remain resilient overall in 2025 and 2026. This outlook reflects the balancing act between external tariff-related risks and underlying domestic economic fundamentals.
Inflation in developing Asia and the Pacific is projected to continue slowing, with the ADB forecasting regional inflation of 2.0% in 2025 and 2.1% in 2026, compared with its April projections of 2.3% and 2.2% respectively. The growth projections for the PRC, the region's largest economy, are maintained at 4.7% for 2025 and 4.3% for 2026.
India, the region's second-largest economy, is forecast to grow by 6.5% in 2025 and 6.7% in 2026, with trade uncertainty and higher US tariffs affecting exports and investment. Economies in Southeast Asia are predicted to grow 4.2% in 2025 and 4.3% in 2026, a decline of roughly half a percentage point from the April forecasts for each year.
The ADB has identified conflicts and geopolitical tensions as potential risks that could disrupt global supply chains and raise energy prices. The ADB Chief Economist, Albert Park, has stated that economies in the region should continue to strengthen their fundamentals and promote open trade and regional integration.
The report also notes positive developments, such as an increase in foreign direct investment disbursement and public investment disbursement reaching its highest level since 2018. Economies in Caucasus and Central Asia have had their growth projections raised by 0.1 percentage points for both 2025 and 2026, largely due to an anticipated boost in oil production.
The PMI has signalled a slowdown in manufacturing since late 2024, and policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports in the PRC. Prospects for developing Asia and the Pacific could be affected by an escalation of US tariffs and trade tensions.
In conclusion, while the Asian Development Outlook July 2025 report highlights potential risks to the region's economic growth, it also emphasises the resilience of many economies within the region. The ADB encourages economies to strengthen their fundamentals and promote open trade and regional integration to mitigate these risks and ensure sustainable growth.
- The recent US trade agreement, which imposes higher tariffs on Vietnamese exports, is expected to reduce demand and slow Vietnam's economic growth in 2025 and 2026, according to the Asian Development Bank (ADB).
- The ADB has also highlighted a worse-than-expected deterioration in the property market of the People's Republic of China (PRC) as a risk.
- The trade deal with the US, announced in early July 2025, imposes gradually increasing US tariffs on exports from Vietnam.
- Inflation in developing Asia and the Pacific is projected to continue slowing, with the ADB forecasting regional inflation of 2.0% in 2025 and 2.1% in 2026.
- India, the region's second-largest economy, is forecast to grow by 6.5% in 2025 and 6.7% in 2026, with trade uncertainty and higher US tariffs affecting exports and investment.
- The ADB has identified conflicts and geopolitical tensions as potential risks that could disrupt global supply chains and raise energy prices.
- Economies in Southeast Asia are predicted to grow 4.2% in 2025 and 4.3% in 2026, a decline of roughly half a percentage point from the April forecasts for each year.
- The ADB Chief Economist, Albert Park, has stated that economies in the region should continue to strengthen their fundamentals and promote open trade and regional integration.
- Prospects for developing Asia and the Pacific could be affected by an escalation of US tariffs and trade tensions, as signalled by a slowdown in manufacturing since late 2024.
