MUFG’s Senior Currency Analyst Michael Wan warns that Vietnam could experience a stagflationary shock if disruptions at the Strait of Hormuz persist, leading to higher oil and energy costs that threaten both economic growth and inflation targets [1]. According to MUFG, Vietnam’s dependence on crude oil imports from the Middle East makes it particularly vulnerable to prolonged closures at the Strait of Hormuz, although its direct trade linkages are less pronounced compared to countries like India within Asia-ex-Japan [1].
The bank estimates that every US$10 per barrel increase in oil prices would cut Vietnam’s GDP growth by approximately 0.2 percentage points and raise inflation by 0.3-0.4 percentage points [1]. Under severe scenarios, such as sustained oil prices averaging US$100 per barrel, Vietnam’s GDP growth for 2026 could fall below 7.5%, compared to MUFG’s current forecast of 8.2% [1].
Wan highlights that the crisis is not solely about higher oil prices but also the risk of a looming energy shortage, which could have meaningful indirect effects across various sectors in Vietnam [1]. The overall outcome points to a stagflationary environment characterized by higher inflation, slower growth, and a likely weaker Vietnam Dong [1].
CONCLUSION
Vietnam is at risk of stagflation if energy disruptions at the Strait of Hormuz persist, with higher oil prices expected to dampen growth and fuel inflation. MUFG projects that sustained oil price increases could push 2026 GDP growth below 7.5%. The market takeaway is a heightened risk outlook for Vietnam’s economy and currency.