Economists warn that the most immediate and direct impact could come from higher oil prices, which may increase production costs, transportation expenses and inflation risks for the country.

Analysts both in Vietnam and internationally have warned that oil prices could surpass US$100 per barrel if the conflict continues. Amid growing tensions, crude oil prices have already risen by more than 10 percent over the past weekend, surpassing the US$80-per-barrel threshold.

Economist Nguyen Minh Phong said the closure of the Strait of Hormuz by Iran, combined with the possibility of a prolonged conflict, would first and most clearly affect global oil prices.

When energy prices surge, production and transportation costs around the world rise as well, pushing up the prices of goods in many countries, including Vietnam.

According to Phong, this represents the most direct and significant pressure on Vietnam’s economy, which has a high degree of openness and relies heavily on imported raw materials.

Rising fuel prices would increase input costs for many industries, affecting both production and consumption while adding further pressure on inflation.

Domino effect on trade and services

The widening conflict could also affect international investment flows.

If more countries in the region are drawn into escalating tensions, investors may adopt a more cautious stance, potentially influencing trade and investment activities involving Vietnam.

Vietnam recently signed the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates, opening new prospects for trade and investment cooperation.

However, if geopolitical instability continues to intensify in the Middle East, implementing and maximizing the benefits of the agreement could become more challenging.

In the service sector, tourism between Vietnam and countries in the region could also be affected.

Flight routes may need to be adjusted to avoid conflict zones, increasing operating costs for airlines and reducing efficiency. Such disruptions could also affect tourism revenue.

According to Phong, prolonged tensions could lead to higher insurance premiums, logistics costs, inventory reserves and other expenses needed to manage risks.

Taken together, these factors could place pressure on Vietnam’s macroeconomic stability and overall economic growth.

This comes at a time when Vietnam has set an ambitious growth target of 10 percent for 2026, marking the start of a new phase of double-digit economic expansion.

Although Vietnam has previously dealt with geopolitical tensions in the Middle East, Phong noted that the current situation is more complex due to the broader scope and intensity of the conflict.

“Past experience helps the government and businesses become more proactive in developing response scenarios, ensuring the safety of citizens and maintaining production and business operations,” he said.

“However, the most important thing is to closely monitor developments, update information continuously and prepare flexible solutions suitable for different levels of risk.”

Three inflation scenarios for 2026

According to the Ministry of Finance, several factors could exert upward pressure on prices this year.

Military conflicts and global trade competition may push energy prices higher if supply is disrupted. Rising import prices for raw materials and exchange rate fluctuations could increase production costs, leading to higher consumer prices in Vietnam.

In addition, increases in construction material prices, pork prices and adjustments to prices of state-managed services could also affect the overall price level.

Based on the government’s inflation target of around 4.5 percent for 2026, the Ministry of Finance has developed three inflation scenarios.

In the first scenario, the average consumer price index (CPI) in 2026 would increase by around 3.6 percent compared with 2025.

The second scenario projects CPI growth of approximately 4.1 percent.

The third scenario estimates CPI could rise by around 4.6 percent.

Based on current domestic and international economic developments, the State Bank of Vietnam estimates average inflation in 2026 will increase by about 4 to 4.5 percent.

Meanwhile, international organizations forecast Vietnam’s average inflation this year to range between 3.2 percent and 4 percent.

To manage price stability, the Ministry of Finance emphasized the need to continue controlling inflation while mobilizing resources to support economic growth.

Price management policies should balance macroeconomic stability with the recovery and expansion of production and business activities.

The ministry also recommended continuing the roadmap toward market-based pricing for public services and state-managed goods, while ensuring that adjustments are carefully calibrated and aligned with CPI trends.

In the coming period, ministries, sectors and local authorities are expected to actively implement measures to manage prices and stabilize essential consumer goods and services.

At the government’s regular meeting for February held on March 4, Prime Minister Pham Minh Chinh reiterated the importance of maintaining the goal of achieving economic growth of at least 10 percent while safeguarding macroeconomic stability and controlling inflation.

He instructed ministries and agencies to urgently assess the potential impact of the Middle East conflict on Vietnam and develop appropriate response scenarios.

Tien Phong