Vietnam GDP Growth Slows in Q1 2026 Amid Middle East Oil Crisis

Vietnam's economy posted solid but slower growth in the first quarter of 2026, with GDP expanding 7.83% year-on-year, down from 8.46% in the previous quarter, according to the National Statistics Office. While the figure marks an improvement from the 7.05% growth recorded in Q1 2025, it falls short of the government's ambitious target of at least 10% growth for the full year.

A key factor weighing on economic momentum is Vietnam's heavy reliance on Middle Eastern crude oil, with more than 80% of its imports sourced from the region. Ongoing disruptions caused by the Iran war, now entering its sixth week, have triggered sharp fuel price increases across the country. Gasoline prices have climbed 21%, while diesel has surged 84%, according to data from leading fuel trader Petrolimex. The spike in energy costs has forced Vietnamese airlines to reduce flights and prompted the government to respond with fuel tax cuts, price subsidies, and remote work policies aimed at lowering national energy consumption.

On the trade front, Vietnam recorded a quarterly deficit of $3.64 billion, with exports rising 19.1% to $122.93 billion and imports climbing 27.0% to $126.57 billion. March exports reached $46.44 billion, up 20.1% year-on-year, while industrial production grew 6.9%. Consumer inflation rose 4.65% in March, largely driven by a 10.81% jump in transportation costs.

To reduce dependence on Middle Eastern oil, Vietnamese officials are actively pursuing alternative supply arrangements with Gulf states, Japan, and South Korea. Retail sales for the quarter rose a healthy 10.9%, signaling resilient domestic demand despite external pressures. Whether Vietnam can sustain strong growth and meet its 10% annual target will depend heavily on how quickly global energy conditions stabilize.