Vietnam’s Trade Deficit with ASEAN Surges 67% in Early 2025 Amid Rising Imports

Economic

Summary:

Vietnam recorded a $6.51 billion trade deficit with ASEAN in the first five months of 2025—an increase of 67% year-over-year—mainly driven by a surge in imports outpacing relatively stagnant export growth, especially to key regional partners....

Rising Imports Outpace Modest Export Gains

According to Vietnam’s General Department of Customs, total trade between Vietnam and ASEAN reached $38 billion in the first five months of 2025, marking a 10.4% year-over-year (YoY) increase. However, this growth was heavily tilted toward imports, which jumped by 16.2% to $22.2 billion, while exports rose only 3.2% to $15.7 billion.

This resulted in a trade deficit of $6.51 billion, significantly higher than the $3.9 billion recorded during the same period in 2024. The sharp increase reflects structural imbalances in Vietnam’s trade performance with ASEAN, highlighting rising dependency on regional supply chains and limited growth in Vietnam’s export competitiveness within the bloc.

Export Performance: Uneven Growth with Signs of Weakening Demand

Vietnam’s exports to ASEAN markets showed a mixed performance. Thailand remained the top export destination with $3.4 billion (+3.5%), followed by the Philippines with $2.49 billion (-2%). Exports to Indonesia dropped by 7.1% to $2.37 billion, Malaysia slipped 0.9% to $2.15 billion, and Brunei suffered a sharp 48.4% decline to $30.2 million.

Notably, only Laos showed a dramatic upswing with a 144.7% increase in export value to $583 million, making it the standout growth market in the region. Cambodia and Singapore also registered moderate increases at 4.5% and 10.3% respectively.

The overall slowdown in exports to major ASEAN partners such as Indonesia, the Philippines, and Malaysia suggests weakening demand or competitive disadvantages in Vietnam’s product offerings.

Imports Surge from Regional Partners Across the Board

Vietnam’s import bill from ASEAN countries climbed significantly across most partners. Thailand led the list with $5.24 billion (+14.3%), followed by Indonesia with $4.83 billion (+24.8%). Imports from Malaysia totaled $4.17 billion (+1.5%), and Cambodia’s supply surged 31.2% to $3.23 billion.

Singapore remained a major source of goods with $2.48 billion (+14.6%), while imports from the Philippines decreased by 6.7% to $1.04 billion. Lào also stood out with an 80.9% increase to $979 million, suggesting growing energy or resource trade. Imports from Brunei grew 11.1%, while Myanmar saw a sharp 31% decline, down to $87 million.

The widespread import increase indicates rising domestic production needs and regional integration but also raises concerns over import dependency, especially in intermediate goods and raw materials.

Economic and Policy Implications

The steep rise in Vietnam’s trade deficit with ASEAN underscores an urgent need to reassess export strategy, diversify markets, and enhance value-added production. While growing imports can reflect positive industrial activity, a persistently widening deficit poses risks to the balance of payments and currency stability.

Key challenges include limited export diversification, declining demand from traditional markets, and weak price competitiveness. To address this, Vietnam may need to invest more in trade facilitation, technological upgrades, and product innovation targeting ASEAN preferences.

At a regional level, Vietnam’s situation also reflects broader asymmetries within intra-ASEAN trade, where more advanced economies like Thailand and Singapore consistently run surpluses. Long-term policy focus may need to shift toward more balanced and inclusive regional supply chain development.

Vietnam’s 67% surge in trade deficit with ASEAN in early 2025 is more than a statistical anomaly—it signals a structural trend requiring coordinated economic response. Export stagnation and import acceleration highlight the fragility of Vietnam’s regional trade balance. Going forward, competitiveness, technological upgrading, and smarter integration strategies will be key to ensuring sustainable and resilient growth in Vietnam’s ASEAN trade relations.

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Economic

IPO Momentum Builds Following Market Volatility

The US IPO market has shown strong signs of revival in recent weeks, following a cautious period triggered by tariff policy announcements in April 2025. The renewed momentum is highlighted by several successful listings, including the fintech firm Chime, whose stock surged 59% on its first trading day (June 12), energizing market sentiment.

According to Dealogic data, US IPOs have raised $25.36 billion so far this year—far exceeding the $18.22 billion and $9.53 billion collected by the same point in 2024 and 2023, respectively. This recovery is particularly significant considering that the market had been nearly frozen just two months earlier due to policy-driven uncertainty.

A Busy Pipeline of High-Profile Listings Ahead

The remainder of 2025 is expected to feature a dense IPO calendar, with well-capitalized and mature startups preparing to go public. Notable upcoming IPOs include Klarna (buy-now-pay-later platform), Gemini (crypto exchange), Cerebras (AI chipmaker), and Medline (healthcare equipment manufacturer).

Circle Financial’s recent IPO and post-listing stock surge further validated the resurgence. Samuel Kerr from Mergermarket emphasized that June 2025’s IPO performance was notably strong and may serve as a bellwether for broader activity in Q4. Kat Liu of IPOX echoed this view, noting that late-stage startups are now more confident in testing public markets, thanks to these early successes.

Sectoral Trends: Tech, Crypto, and Healthcare Lead the Way

This year’s IPO activity has been dominated by firms in financial services, AI technology, healthcare, and energy. Companies in these sectors—especially those with resilient demand and low exposure to geopolitical risk—are seeing heightened investor interest.

The technology and crypto segments, in particular, are poised for a surge in listings. Analysts anticipate that recent IPO wins and growing market optimism will encourage other digital-native firms to expedite their public offerings. The inclusion of names like Gemini and Cerebras illustrates this shift, with investors eager to tap into growth sectors like decentralized finance and AI infrastructure.

Improved Sentiment and Liquidity Support Market Recovery

Investor sentiment has shifted markedly from April’s caution to June’s optimism. This turnaround reflects stronger macroeconomic stability, reduced immediate policy shocks, and a backlog of companies that delayed going public during earlier periods of market uncertainty.

Leading investment banks and exchange executives have noted increasing engagement from institutional investors, particularly for firms with strong fundamentals and sectoral tailwinds. With IPO valuations becoming more rational compared to the 2021–2022 boom-bust cycle, investor expectations are now better aligned with long-term performance metrics.

A Constructive Path Forward for Public Listings

The resurgence in IPO activity signals not only a rebound in capital markets but also the maturing of high-growth startups into publicly accountable businesses. If momentum holds, Q4 2025 could witness one of the most active IPO seasons in recent years, reinforcing the role of public equity markets in driving innovation and capital access.

While political and macroeconomic risks remain, the current trend suggests that investor appetite is returning—particularly for companies positioned in technology-driven sectors. With more major listings on the horizon, the US IPO landscape is entering a cautiously optimistic phase of recovery and expansion.

Source: Reuters

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Economic

AI Challenges Southeast Asia’s Traditional Labor Advantage

Southeast Asia, long regarded as a manufacturing powerhouse thanks to its low labor costs, is undergoing an accelerated labor market disruption due to AI and automation. Countries like Vietnam and Indonesia, where hourly wages remain significantly lower than in China or Mexico, now face the paradox of their biggest advantage becoming obsolete. AI systems can now perform repetitive tasks faster and more cheaply than human labor, prompting structural shifts across key industries.

For example, 70% of jobs in Vietnam and 44% in Thailand are classified as high-risk in the face of automation. Major manufacturers, including partners of Nike and Adidas in Indonesia, have begun layoffs due to decreased labor demand. Yamaha has also shut down facilities in the country. The region’s reliance on low-skilled work makes it particularly susceptible to such shifts, with over 40% of manufacturers planning to increase automation and adopt smart production technologies in the next five years.

Agriculture And Customer Service Under Threat

Agriculture—employing roughly a third of ASEAN’s workforce and contributing 11% to the region’s GDP—is also in flux. In Vietnam and Indonesia, AI tools are being used for pest control and yield optimization. AI-equipped drones monitor crop health, reducing the need for manual labor. While efficiency improves, it comes at the cost of millions of jobs. By 2028, automation could eliminate 6.6 million agricultural jobs across ASEAN, with smallholder farmers—who make up 70–80% of the sector—struggling to adapt due to limited digital literacy and financial access.

Customer service is undergoing a similarly dramatic transformation. AI-powered chatbots can now manage queries, complaints, and routine tasks, reducing the need for human intervention. In the Philippines—where call centers have historically been a key economic sector—over one million jobs could become obsolete by 2028. Even Southeast Asia’s largest bank, DBS, has recently cut 4,000 positions to adopt AI-powered service models.

Education And Healthcare Remain Human-Centered Pillars

Amid the disruption, sectors emphasizing human empathy, judgment, and contextual understanding are proving more resilient. Education remains a critical area of opportunity. With 12 million teachers already active and a projected shortfall of four million more by 2030, Southeast Asia urgently needs educational professionals. Teachers play a role far beyond content delivery—they offer social-emotional support and cultural grounding that AI cannot replicate.

Healthcare is another labor-intensive sector where AI complements rather than replaces. While AI systems streamline administrative tasks and offer virtual consultations, the core of clinical care still relies on human expertise. As Southeast Asia grapples with chronic disease burdens, urbanization, and population growth, demand for healthcare workers is set to increase significantly. Innovations like Singapore's Doctor Anywhere exemplify how AI can enhance but not supplant medical services.

New Career Frontiers: Clean Energy And AI Ethics

As sustainability becomes a regional imperative, renewable energy is creating new employment channels. Vietnam’s booming solar and wind industries have already added 10,000 jobs between 2019 and 2022. The clean energy transition is not only generating economic value but also offering jobs that are relatively automation-proof.

Simultaneously, ethical governance of AI is gaining traction. Singapore leads the region in this domain, with a 15% increase in AI ethics-related roles since 2020. As more businesses deploy AI at scale, demand for professionals who can guide responsible deployment is expected to rise, opening up new career paths in governance, compliance, and digital policy.

Upskilling Becomes Essential In The Age Of AI

Southeast Asia now faces a pivotal moment: adapt or be left behind. As automation reshapes entire industries, the workforce must evolve in parallel. Lifelong learning, digital fluency, coding skills, and data analytics are becoming indispensable tools for job retention and mobility.

The future of work in Southeast Asia will be defined by flexibility, curiosity, and adaptability. While AI may displace traditional roles, it also creates space for innovation and new economic sectors. Those who invest in upskilling today will shape the region’s labor market tomorrow—one that is not only more resilient but also more inclusive and forward-looking.

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Outflows From US Markets Amid Fiscal Uncertainty

Global investors are reallocating capital away from US markets due to growing unease over national debt levels, trade policy risks, and a fading perception of US assets as safe havens. In May 2025 alone, US equity and ETF funds witnessed $24.7 billion in net outflows—the largest monthly withdrawal in a year, according to LSEG Lipper.

A concurrent bond sell-off and the depreciation of the US dollar have further reduced the attractiveness of US securities. Analyst Chris Weston of Pepperstone emphasized that the dollar is no longer perceived as the default safe asset, and the recent wave of asset liquidations reflects a rising preference for markets with appreciating currencies and stronger fundamentals.

Europe Attracts Investment With Monetary Support And Growth Potential

European markets have emerged as a leading alternative. In May, European funds attracted $21 billion in new inflows, pushing year-to-date net capital inflows to $82.5 billion—the highest in four years. Investor optimism is buoyed by accommodative monetary policy and fiscal stimulus, including Germany’s ambitious €1 trillion economic plan.

The European Central Bank’s (ECB) eighth rate cut within a year reflects a commitment to sustaining economic momentum, even as the region faces potential trade friction with the US. Michael Field of Morningstar noted that while valuation differentials initially attracted capital to Europe, the shift is now sustained by changing investor sentiment and concerns about US policy volatility.

Market performance reinforces this sentiment: the MSCI Europe index has surged 20% since the beginning of 2025, significantly outpacing the 2.7% gain in the MSCI USA index. This divergence suggests a medium-term reallocation trend, rather than a short-lived rotation.

Emerging Markets And Asia Gain From Stability And Domestic Demand

Emerging markets, especially in Latin America and Asia, are also experiencing increased investor interest. In May, equity ETFs focused on emerging markets recorded $3.6 billion in inflows, bringing the total for 2025 to $11.1 billion. Latin America is viewed as relatively shielded from trade and military conflicts elsewhere, while Asia benefits from strong domestic consumption and relatively lower fiscal burdens.

Manish Raychaudhuri of Emmer Capital Partners emphasized that Asian markets are well-positioned to capture redirected global capital due to their healthier debt profiles and robust growth. Compared to European nations like Italy and the UK, many Asian countries maintain stable bond yields and investor confidence due to sound fiscal fundamentals.

Japan Sees Record Investment Surge Amid Yen Weakness And Political Stability

Japan, in particular, has become a magnet for global investment. High-profile investors like LVMH and US-based L Catterton have launched targeted investment funds for Japanese mid-sized companies. In 2025, Japanese M&A deals driven by foreign private equity funds reached $24.3 billion by the end of May, up from $19.4 billion for all of 2024.

Japan’s share of global private equity buyouts has surged from 1% in 2024 to 4% in the first five months of 2025. A combination of currency advantage—due to the weakened yen—political stability, and high-quality corporate assets has enhanced Japan’s appeal, particularly as global investors seek refuge from tariff-driven volatility in the US and China.

According to LSEG data, Japan’s M&A volume in April and May rose 3.8 times compared to earlier months, with more than 10% of global M&A deals in May involving Japanese companies. This demonstrates how strategic clarity and market confidence can rapidly shift investor focus.

China Reasserts Its Role As A Long-Term Investment Magnet

China is also regaining attention as a stable and growth-driven destination. Vice Chairman of China’s securities regulator, Li Ming, reiterated that foreign investors are increasingly turning to Chinese assets due to strong macroeconomic fundamentals and predictable policy direction. In Q1 2025, China’s GDP grew by 5.4% year-over-year, reaffirming its role as a global growth engine.

Foreign holdings of onshore Chinese bonds increased by $10.9 billion in April, and net equity purchases resumed in late April, reflecting renewed investor confidence. China’s comprehensive manufacturing base, advanced infrastructure, and massive consumer market remain major attractions, even amid external geopolitical tensions.

A Redrawing Of Global Investment Maps

The reallocation of capital away from the US reflects more than just cyclical adjustments—it signals a strategic shift driven by concerns over fiscal governance, monetary stability, and trade policy in Washington. While Europe benefits from easing rates and coordinated fiscal support, Asia offers a mix of growth, demographic resilience, and economic stability.

Japan's resurgence and China’s continued momentum reflect a broader pivot toward East Asia. Meanwhile, emerging markets present a safe harbor in an increasingly polarized world economy. If these trends continue, the next decade may witness a more decentralized and balanced global capital landscape, with investors diversifying across multiple centers of growth rather than relying on US-centric paradigms.

Source: Nikkei Asia

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Economic

Inflation Levels Remain Steady as Energy Prices Fall

According to Germany’s Federal Statistical Office (Destatis), the country’s annual inflation rate remained unchanged at 2.1% in May 2025—marking a stable plateau after modest declines from earlier in the year. This follows 2.2% in March and 2.3% in both January and February. Month-on-month, consumer prices increased slightly by 0.1%.

Ruth Brand, President of Destatis, attributed the stabilization to a continued decrease in energy prices. However, she noted that this deflationary impact was offset by upward pressure from rising food and service costs. This dual trend suggests that while external price shocks, particularly in energy, are subsiding, domestic consumption pressures are beginning to reassert themselves.

Private Consumption And Exports Spur Modest Growth Outlook

Germany’s macroeconomic trajectory is showing signs of improvement. The German Institute for Economic Research (DIW) revised its GDP forecasts upwards, projecting real GDP growth of 0.3% in 2024 and 1.7% in 2025—both higher than previous estimates of 0.1% and 1.1% respectively.

Chief economist Geraldine Dany-Knedlik highlighted an unexpectedly strong start to the year, fueled by two key drivers: a rebound in private consumption and an export surge aimed at bypassing potential US tariffs. These developments helped the German economy avoid slipping into stagnation for another consecutive year.

However, Dany-Knedlik cautioned that the short-term momentum does not resolve deeper structural concerns. Germany continues to grapple with eroding competitiveness and a chronic shortage of skilled labor, both of which limit long-term growth capacity and innovation potential.

Policy Uncertainty And Investment Outlook For 2025

In contrast to the short-term optimism, DIW President Marcel Fratzscher warned that unresolved political and fiscal challenges could undermine stability. He flagged US trade policy and planned tax cuts as potential global disruptors, capable of destabilizing markets through increased debt and volatility.

Domestically, Germany’s political gridlock poses additional concerns. Fratzscher urged the ruling coalition to finalize the federal budgets for 2025 and 2026 and establish a unified long-term economic vision. Without such clarity, investor confidence may falter, weakening Germany’s ability to capitalize on its tentative recovery.

One potentially stabilizing factor is the expected rollout of a new infrastructure investment package in 2025. DIW anticipates this stimulus could help address structural bottlenecks and invigorate sectors such as transportation, digital infrastructure, and green energy—offering a much-needed boost to medium-term productivity.

Stability Masking Structural Challenges

While Germany’s inflation rate appears contained and its GDP forecast has improved modestly, the underlying economic landscape remains fragile. The recovery rests heavily on consumer spending and short-term trade dynamics, both of which are susceptible to external shocks and political volatility.

To maintain momentum, Germany will need not only fiscal coherence but also structural reforms that address competitiveness and labor force issues. The current macroeconomic environment offers a window of opportunity—but without strategic action, that window may close before real transformation can take root.

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Economic

Vietnam’s Strategic Entry Into BRICS Framework

Brazil, the 2025 rotating chair of BRICS, declared that Vietnam has been formally designated as a "partner country" within the bloc—a move that aligns with BRICS’s broader strategy to enhance global governance inclusiveness. The decision acknowledges Vietnam’s population of nearly 100 million and its dynamic economy as key assets contributing to the bloc’s evolving geopolitical and economic vision.

This recognition positions Vietnam among a select group of ten partner nations—alongside Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, and Uzbekistan—under a category created at the 2024 BRICS Summit in Kazan. This tier is designed to broaden BRICS’s global outreach without necessitating full membership.

Opportunities Within The BRICS Institutional Architecture

As a partner country, Vietnam will be invited to selected BRICS meetings and initiatives, depending on unanimous consent among core members. This partnership offers Vietnam access to vital BRICS mechanisms, including the New Development Bank (NDB), which provides infrastructure financing to developing nations. Participation in the NDB could significantly support Vietnam’s infrastructure ambitions, especially in green energy, logistics, and digital transformation.

Importantly, Vietnam’s alignment with BRICS reflects shared advocacy for a fairer, more inclusive international order—an ambition Vietnam has consistently promoted in multilateral forums. This includes calls for improving capital access, equitable trade mechanisms, and greater representation for developing nations within global institutions.

Deepening Ties With BRICS Members: A Gradual Pivot

Vietnam's upgraded role is not an isolated move but part of a deliberate strategy to diversify partnerships. In 2024, Vietnam elevated its relationship with the UAE to a comprehensive partnership and welcomed Ethiopia’s Prime Minister Abiy Ahmed in April. It has also expanded trade negotiations with Egypt and sustained diplomatic dialogue with Iran—countries that recently joined BRICS as full members.

These bilateral initiatives suggest a correlation between Vietnam’s outreach efforts and the expansion trajectory of BRICS. While the bloc grows in both membership and influence, Vietnam’s deeper integration enhances its geopolitical positioning and amplifies its voice on issues vital to the Global South.

Prospects Of Full Membership: A Matter Of Consensus

Despite this momentum, Brazil has not confirmed whether there are ongoing deliberations regarding Vietnam’s elevation to full membership. BRICS decision-making rules require unanimous consent from existing members for admitting new full members. This procedural safeguard ensures alignment but also presents diplomatic hurdles.

Nonetheless, Vietnam's consistent participation in BRICS-related engagements and its parallel bilateral diplomacy with key members could pave the way for deeper integration in the future, especially if internal reforms within the bloc encourage broader inclusion.

Strategic Alignment In A Multipolar World

Vietnam’s designation as a BRICS partner marks a significant diplomatic milestone, reflecting a deliberate shift toward a multipolar engagement strategy. It reinforces Vietnam’s commitment to international equity, development cooperation, and a rules-based order that gives developing nations a more substantial role in global governance.

As BRICS continues its evolution from a loose coalition into a structured multilateral platform, Vietnam’s involvement—though still limited to partnership status—positions it as a proactive voice in shaping the agenda for equitable growth, digital transformation, and sustainable development across the Global South.

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Central Bank

The Federal Reserve's balancing act between concerns about a weakening labor market and still above-target inflation will take center stage for investors in the coming week as they weigh risks to the rally in the U.S. stock market.

The S&P 500has rebounded sharply over the past two months as worries about the impact of trade barriers on the economy have eased since PresidentDonald Trump's "Liberation Day" announcement on April 2 sent the market plunging.

The rally hit a stumbling block on Friday as stocks fell globally and investors moved to safe-haven assets after Israel launched a military strike on Iran.

The Fed's two-day monetary policy meeting could present the next major obstacle for markets. While the U.S. central bank is widely expected to hold interest rates steady when it announces its decision on Wednesday, investors are eager for any hints about whether the Fed might be poised to lower rates in the coming months.

The fed funds rate has been at 4.25%-4.50% since the central bank last eased in December, by a quarter percentage point.

"What the Fed is going to have to try to do next week is encourage the belief that they are able to act without actually promising anything," said Drew Matus, chief market strategist at MetLife Investment Management. "If they move rates lower too early before there is evidence that there is weakening in the economy that they can then point to, they raise the risk of actually boosting inflation expectations further."

At its last meeting in May, the central bank said risks of both higher inflation and unemployment had risen. The Fed has a dual mandate to maintain full employment and price stability, and investors will be seeking any signs of whether officials are more concerned about one of those goals and what that means for the path of rates.

One area of focus on Wednesday will be an update to Fed officials' projections about monetary policy and the economy, which were last published in March.

Larry Werther, chief U.S. economist of Daiwa Capital Markets America, will be watching estimates for unemployment. While the Fed officials' last projection was for unemployment to end 2025 at 4.4%, Werther is projecting a year-end rate of 4.6%, saying recent data including jobless claims has indicated softening in the labor market.

"If the unemployment rate is expected to move higher, just aligning with what we've seen in the labor market, and inflation isn't expected to move much beyond what the Fed is projecting, then it opens the door to further easing in support of the labor market later this year," Werther said.

Fed funds futures indicate markets expect two rate cuts by the end of this year, with the next one likely in September, according to LSEG data. Such bets were bolstered by benign inflation reports this week.

Investors are also focused on Trump's selection to succeed Fed Chair Jerome Powell, with the president regularly urging the central bank to lower rates. Trump earlier this month said a decision on the next chair would be coming soon, although he said on Thursday that he would not fire Powell, whose term ends in May 2026.

The release of monthly retail sales on Tuesday will also be in focus. Investors want to see if tariffs are leading to higher prices that pressure consumer spending.

Trade developments are likely to continue to keep markets on edge, with a 90-day pause on a wide array of Trump'stariffsset to end on July 8. A trade truce this week between China and the United States offered hope that the two countries can reach a lasting resolution, but the absence of detailed terms left room for potential future conflict.

The S&P 500is up about 2% so far this year. But the index has rallied 20% since its low for the year on April 8, and is just over 2% off its record high set in February. It was down 0.8% in Friday morning trade.

"The market has rallied so hard, so fast," said Marta Norton, chief investment strategist at retirement and wealth services provider Empower. "There is vulnerability to anything that doesn't support that kind of benign narrative that has been established."