"If global financial conditions tighten more, external demand may weaken further," the World Bank was cited by Vietnam News Agency as saying on Tuesday.
Vietnam's total exports in the January-May period dwindled 11.6 percent from a year earlier to 136.17 billion U.S. dollars, while imports dipped 17.9 percent to 126.37 billion dollars, according to data released by the General Statistics Office.
The data showed that Vietnam's trade surplus with the U.S., its largest export market, narrowed 22 percent to 31.2 billion dollars in the first five months from a year ago.
Steep falls in exports included furniture, seafood, clothing, footwear and smartphones, which all are the biggest foreign currency earners for the country.
The Southeast Asian country's exports have tumbled since last November, with a brief rebound in February, in the face of weaker demand abroad, adding urgency for support measures from the government, analysts said.
Vietnam's industrial production index in May slightly rose 0.1 percent from a year earlier, down from the annual growth of 0.5 percent in April, said the World Bank.
One bright spot is the sector of retail sales and services, which grew 11.5 percent in May, partially offsetting external headwinds, the bank added.
As Vietnam's economic growth is slowing in the face of global headwinds, power shortages in the country's northern region will add to the woes, according to the bank.
In an attempt to shore up the economy, the State Bank of Vietnam has adopted monetary policy easing, cutting key interest rates four times this year.
"However, authorities must remain vigilant to potential pressures on capital flows and the exchange rate resulting from diverging monetary policies between Vietnam and other countries," World Bank analysts said, highlighting the need for "careful monitoring and proactive measures."
In addition to monetary measures, the World Bank suggested Vietnam accelerate public investment disbursement with a focus on digital and green technologies, infrastructure development and human capital which would promote sustainable long-term development.
Streamlining administrative procedures and removing regulatory hurdles would help promote business activities and investments for economic growth, it said.
The bank also urged Vietnam to identify workers and families impacted by the slowdown in the manufacturing sector and offer support via the social protection system.
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