World Bank lifts Vietnam’s 2026 GDP growth forecast to 7.4%

The World Bank has raised its forecast for Vietnam's 2026 GDP growth to 7.4%, according to its latest East Asia and Pacific Economic Update. This projection now anticipates a slightly slower growth rate of 7.3% in 2027 and 2028. The higher growth forecast stems from stronger performance in manufacturing and export sectors, especially high-tech and AI-related products.

The report cites increased domestic stimulus from structural reforms and expanded public investment as key factors supporting this growth trend. However, the World Bank warns that inflationary pressures could persist, with consumer price inflation in Vietnam expected to average 4.2% in 2026 due to higher fuel, housing, and utility costs.

Vietnam now joins a select group of stronger performers in the East Asia and Pacific region, which is expected to grow by 4.5% in 2026, outpacing Malaysia's projected 5.1% and Thailand's 2%. The report highlights Vietnam's rapid adoption of AI, noting that the region's pace of AI adoption remains uneven across developing economies.

Vietnam leads among emerging markets in generative AI use, with AI applications already benefiting various sectors, from language learning to medical imaging and tourism. Small AI tools tailored to local languages and economic needs, rather than costly frontier models, are proving particularly beneficial. However, the World Bank cautions that AI adoption alone won't lead to broad-based productivity gains.

Businesses in the region must contend with skills shortages, high adoption costs, and security and privacy concerns. Additionally, the demand for AI-related skills remains relatively low compared to other emerging markets, underscoring the need for greater investment in education and skills development. Reliable electricity and effective governance are crucial for attracting investment in data centers.

The report also suggests that Southeast Asian economies could profit from opportunities in semiconductor manufacturing and other AI value chain segments. To foster AI adoption, governments should improve digital and energy infrastructure, increase access to capital and skills, and utilize AI to enhance public services.