Vietnam Macro Update in July 2025 and important information in mid-August

Summary of key information:

• The world economy continues to be polarized with leaders such as the US and China facing different structural problems and diverse approaches and handling
• Vietnam’s economy has still grown well in recent times. However, pressure on the financial market, especially in the foreign exchange segment, is increasing
• The stock market exploded, but foreign investors, especially some large institutions that had been attached to Vietnam for a long time in the previous cycle, withdrew

The world economy has maintained the polarizing trend of world locomotives in recent times. The most notable are still economic developments from the US, China, and to a lesser extent, the EU, Japan, South Korea, and India. This polarization, which has been taking place quietly for the last decade, has exploded into an official trend since the beginning of President Donald Trump’s term.

This polarizing trend makes it more difficult to coordinate policies among the world’s pillars. While investors are accustomed to QE and loose monetary policy, where interest rates are almost zero percent and firm confidence in large corporations “too big to fail” helps financial activity boom, in the new world we face, these may no longer be accurate.

In addition to the obvious advantages of the vibrant financial and investment markets, moral hazards also increase, as investors, especially individuals, become greedy and lack prudence, coming from loss experiences as well as perceptions of market uncertainty. While current trends may have occurred, as Ray Dalio puts it, we are in the final stages of the long-term borrowing cycle (lasting 80-100 years on average), and almost no surviving investor has experienced these phases (except for some legends such as Warren Buffet,  who even his main partner, Charlie Munger, recently passed away and is also expected to step down from Berkshire’s investment activities by the end of 2025). Therefore, investors may not be fully prepared for the next period of volatility.

The other positive side of polarization is that some existing tensions and fighting will end sooner, as volatility causes many countries to focus on domestic issues rather than financing allies and partners with unfavorable geographical locations. Although the losing side may feel unfair, it must be said that these fighting has claimed millions of lives, and perhaps an end to the victory in favor of either side may give hope to the people of these areas.

GTJASVN_Macro Report_Vietnam Macro July Update 2025