Vietnam's two economic powerhouses gain momentum

Ho Chi Minh City's economy expanded 9.86% in the third quarter, its fastest quarterly growth in nearly a decade, according to the city's statistics office.

The strong performance lifted the city's economic growth to 9.06% in the first nine months of 2026.

Services accounted for more than half of the city's growth, with transportation and warehousing standing out at 14.16%. Industrial production continued to expand, while investment activity also increased.

A survey of industrial enterprises revealed relatively positive expectations for the final quarter. More than one-third anticipated better business conditions than in the third quarter, while another 45.2% expected conditions to remain stable.

Most surveyed businesses therefore expected their operations to remain steady or improve during the final three months of the year.

Hanoi also gathered pace, recording third-quarter growth of 10.02%, bringing its nine-month expansion to 8.85%, higher than in the same period last year.

Services remained a key pillar of the capital's economy, while its infrastructure investment drive was reflected in local state-budget investment reaching VND107.8 trillion (approximately US$4.1 billion), up 81.2%.

Nationwide, GDP expanded 9.01% in the first nine months, with third-quarter growth reaching 9.95%.

Maintaining such momentum amid fluctuations in fuel and transportation costs represents a notable achievement.

Manufacturing output increased 12.9%, accompanied by a 12.8% rise in the industry's sales index.

Exports exceeded US$434 billion, up 24.5%.

By the end of September, public investment disbursement had reached 62.9% of the annual plan assigned by the Prime Minister, an improvement of 12.9 percentage points from the same period last year.

Against a volatile global backdrop, Vietnam's achievements in economic growth, inflation management, macroeconomic stability and social welfare during the first nine months of 2026 deserve recognition.

They reflect both the Government's policy efforts and the resilience of the broader economy.

Obstacles on the runway

Despite the encouraging growth figures, significant challenges remain.

In Ho Chi Minh City, 45.9% of industrial enterprises surveyed identified weak domestic demand as a factor affecting their operations, while 37.8% cited high borrowing costs.

For businesses considering production expansion, two questions remain crucial: whether additional output can be sold and whether the resulting revenue will be sufficient to service their loans.

Private-sector investment in the city rose 5.3%, compared with a 22% increase in state investment.

As the non-state sector accounts for nearly half of total realised investment, understanding why its expansion has been slower is essential.

Are businesses waiting for stronger market demand, or are they struggling with access to financing, land and administrative procedures?

In Hanoi, the substantial increase in public investment has not eliminated implementation bottlenecks.

Some 190 public investment projects continue to face difficulties, mainly involving planning, land administration, site clearance and construction materials.

Another 287 non-budget-funded projects still require further action, monitoring and administrative follow-up.

Projects delayed by land clearance or procedural obstacles cannot generate construction output on schedule and may incur additional costs.

At the national level, similar obstacles threaten the economy's efforts to accelerate.

Total social investment reached VND3,109.6 trillion (approximately US$118 billion) during the first nine months, equivalent to only around 61% of the estimated VND5.1 quadrillion required for the full year to support double-digit growth.

That leaves nearly VND2 quadrillion in investment that would need to be implemented during the final quarter to meet the estimated requirement.

More importantly, where will such an enormous amount of capital come from?

Mobilising and deploying that volume of investment within just three months presents a formidable challenge.

The requirement covers the entire economy, including state investment, private-sector capital and foreign direct investment.

Even securing sufficient financing would not resolve everything. Projects must be ready for construction, equipment must be installed and assets must be brought into operation on schedule.

Meanwhile, 1,131 stalled projects, representing approximately VND779 trillion in total investment, have approved plans for resolving their difficulties but remain unresolved.

That figure does not represent money that can immediately be disbursed. It nevertheless illustrates the enormous volume of resources awaiting release.

Public investment disbursement also varies considerably across agencies and projects.

Seven ministries and agencies have disbursed less than 15% of their allocations or have yet to disburse any funds, while 37 projects and component projects have achieved less than 40% of their planned disbursement.

According to the Ministry of Construction, supplies of construction sand at major infrastructure projects currently meet only about two-thirds of demand.

Material shortages could prolong construction schedules and drive up costs.

Businesses are also facing increasing financial pressure.

According to the Ministry of Finance, average business revenue increased 21% during the first eight months, while input purchasing costs rose 27%.

Selling more products does not necessarily leave businesses with additional resources to upgrade equipment or expand production when costs are increasing even faster.

The number of enterprises entering or re-entering the market declined 3.2% year on year during the first nine months.

The number resuming operations alone fell 14%.

Most businesses leaving the market were small enterprises temporarily suspending operations.

Their ability to recover deserves attention because business activity is closely connected to employment and household incomes.

The scope for supporting growth through bank credit is also narrowing.

Economists estimate that the banking system's loan-to-deposit ratio had reached approximately 115% by mid-2026.

Deposit mobilisation has grown more slowly than credit for the past five years, while credit expansion has accelerated this year to meet financing demand from major projects.

To increase lending, banks must secure corresponding funding.

Consequently, average lending rates on newly issued loans have been rising towards double-digit levels, substantially higher than at the end of 2025.

Businesses facing double-digit borrowing rates must carefully assess profitability and debt-servicing capacity before expanding production.

Simply raising credit limits does not create additional long-term funding.

When banks must attract deposits at higher costs, reducing lending rates becomes more difficult.

Banks must also maintain liquidity, while monetary policy faces pressure from inflation and foreign currency demand.

The remaining investment requirement therefore cannot realistically be financed through bank lending alone.

Despite strong export growth, imports approached US$454 billion, resulting in a merchandise trade deficit of US$19.42 billion during the first nine months.

In the same period last year, Vietnam recorded a trade surplus of US$16.87 billion.

Imports of machinery, equipment and production inputs can strengthen future productive capacity.

However, higher imports also increase demand for foreign currency payments.

Economic acceleration must therefore take into account foreign exchange availability and the time required to transform imported inputs into finished products and revenue.

External pressures are also emerging through energy markets.

Restrictions on shipping through the Strait of Hormuz, combined with shortages of diesel in international markets, have pushed up fuel and transportation costs.

Global petroleum prices have risen approximately 11-21% compared with their August average.

Domestic fuel supplies have generally remained secure, but some localities have experienced restricted diesel sales, requiring supplies to be redirected to areas facing temporary shortages.

Higher fuel prices increase construction and manufacturing costs, while supply disruptions can delay projects even when financing has already been secured.

Average consumer price inflation reached 4.52% during the first nine months, already slightly exceeding the full-year target of approximately 4.5%.

Average employee incomes rose 9.1%, a positive development.

However, improvements in living standards also depend on the cost of food, housing, transportation and education.

When essential expenses rise, households have less money available for other purchases, potentially weakening demand for businesses.

What Vietnam needs to achieve in the final quarter

Government Resolution 312/NQ-CP, issued on October 5, 2026, highlights the scale of the remaining challenge.

Under the resolution's growth scenario, Vietnam would need fourth-quarter economic growth of 12.5%, compared with the 9.95% recorded in the third quarter.

Ho Chi Minh City would need to achieve growth of 13.23%, while Hanoi would need to expand by 16.55%.

These targets are considerably higher than their respective third-quarter growth rates of 9.86% and 10.02%.

Together, the two cities accounted for 35.70% of Vietnam's combined provincial gross regional domestic product in 2025.

With more than one-third of the country's economic output concentrated in these two urban centres, their performance will have a substantial impact on the national growth outcome.

Other localities also face demanding fourth-quarter growth requirements.

Hai Phong needs growth of 15.39%, Thanh Hoa 17.10%, Vinh Long 17.25% and Lang Son 18.41%.

These figures are targets under the Government's growth scenario, not forecasts of actual performance.

Each locality must identify precisely where additional growth will come from.

Which projects are ready to begin construction immediately? Which enterprises already have sufficient orders to increase output during the remaining three months?

Resolution 312 acknowledges that traditional growth drivers have fallen short of expectations, domestic demand has not strengthened sufficiently, businesses continue to face financing constraints, and total social investment remains below the required level.

Monetary policy, credit, exchange rates and interest rates also remain under pressure.

Combined with substantial outstanding investment needs, constraints on monetary policy and external fuel market volatility, these conditions make achieving double-digit economic growth exceptionally challenging.

Any acceleration plan must therefore account for both the necessary resources and the practical conditions required to deliver results.

Above all, Vietnam must preserve its major macroeconomic balances.

Resolution 312 calls for growth to be closely linked with macroeconomic stability and inflation control.

It also identifies economic efficiency, productivity, business development, employment and incomes as key measures of success.

These macroeconomic foundations are the essential runway that must be protected if the economy is to accelerate and take off.

Strengthening the runway for sustainable growth

Vietnam's nine-month economic performance demonstrates substantial Government efforts to resolve bottlenecks and promote production and investment amid external uncertainty.

Growth accelerated from quarter to quarter, public investment disbursement improved and exports continued to expand.

Together with businesses' ability to adapt, these achievements have created a stronger foundation for pursuing ambitious growth objectives.

However, economist Dr Nguyen Dinh Cung believes greater attention must now be paid to how effectively resources are used.

Investment and credit remain important growth drivers, but banks' lending capacity must be balanced against deposit mobilisation, liquidity requirements and loan maturities.

As financing costs increase, it becomes even more important to prioritise projects with established markets and the ability to generate cash flow.

Cung pointed to the contrast between the 21% increase in business revenue and the 27% rise in input purchasing costs.

These figures alone are insufficient to calculate changes in profitability, but they demonstrate the need to help businesses reduce costs so they can accumulate capital and expand production.

Faster administrative processing, timely payments and the elimination of unnecessary procedures could all help enterprises conserve resources.

Cung also highlighted the difficulties small and medium-sized enterprises face in accessing capital, land and labour.

As major investment projects are implemented, more opportunities should be created for domestic enterprises to supply goods and services.

With additional orders and the capacity to expand production, these businesses could contribute more to economic growth while sustaining jobs and incomes.

Accelerating investment must also go hand in hand with securing adequate supplies of construction materials, energy and transportation services.

Stable supplies would help projects stay on schedule, minimise additional costs and reduce inflationary pressure.

This is particularly important when households are already adjusting their spending in response to higher prices for essential goods.

According to the Ministry of Finance, 1,131 stalled projects still require further action despite having approved plans to address their difficulties.

Resolving these bottlenecks would release additional resources for development.

For projects nearing completion, bringing them into operation sooner would allow investment capital to generate economic benefits more quickly.

For existing businesses, addressing specific obstacles could help maintain production and gradually expand operations without requiring additional borrowing.

Cung raised a fundamental question: Will the assets created by today's investment improve productivity, strengthen production capacity and generate cash flow in the future?

Closely monitoring these outcomes would help policymakers identify where resources should be concentrated.

Every infrastructure project operating efficiently and every enterprise gaining the capacity to invest further would strengthen the foundations for Vietnam to sustain high economic growth in the years ahead.

Tu Giang