Rising Energy Prices Risk Trimming Vietnam's Economic Growth
HANOI, KOMPAS.com - Vietnam’s economy entered 2026 with a relatively solid foundation, yet overshadowed by intensifying global pressures.
The latest data shows that Vietnam’s gross domestic product (GDP) in the first quarter of 2026 grew 7.83% year-on-year, slowing from the 8.46% growth in the fourth quarter of 2025.
This slowdown occurred amid rising cost pressures, particularly in the energy sector. Increases in production input and energy prices are cited as the main factors curbing economic expansion at the start of the year.
Several supporting indicators still show strong performance. Vietnam’s exports in the first quarter of 2026 were recorded to have increased by 19.1%, while retail sales grew 10.9% year-on-year.
However, inflationary pressures are beginning to appear, with the consumer price index (CPI) in March 2026 rising 4.65%, driven by a surge in transportation costs that increased by more than 10%.
In this context, VinaCapital’s Chief Economist Michael Kokalari assesses that without firm policy measures, the pressure from rising energy prices could have a significant impact on Vietnam’s economy.
The main pressure stems from global energy price increases. Brent crude oil prices are projected to rise by around 25%, from $70 in 2025 to approximately $87 per barrel in 2026, equivalent to about Rp 1.48 million per barrel (assuming an exchange rate of Rp 16,994 per US dollar).
This increase is a key factor driving inflation. Projections indicate that Vietnam’s inflation could rise from around 3.5% in 2025 to 5 to 5.5% in 2026.
According to Kokalari, the impact of rising oil prices on inflation in Vietnam is quite significant. Every 10% increase in oil prices can drive inflation by about 0.5 percentage points.
In addition to energy, prices of other commodities such as fertilisers are also rising. This situation increases production costs in the agricultural sector and could lead to rises in food prices.
In recent years, food inflation pressures were held back by China’s weak economy, but now the risks are increasing along with the potential for commodity hoarding.