Vietnam enters the top of the world's largest economies

According to the latest data from the IMF, in 2023, Vietnam's GDP (PPP) will reach about 1,438 billion USD, ranking 25/192 in the world. Meanwhile, Vietnam's GDP per capita will reach about 14,342 USD, ranking 108/192 in the world. This organization predicts that in the period 2024 - 2029, the scale of GDP (PPP) and GDP per capita of our country will continuously improve its ranking in the world rankings. By the end of this year alone, Vietnam's GDP (PPP) is forecast to reach about 1,559 billion USD, ranking 25/192 in the world and GDP per capita is forecast to reach about 15,470 USD, ranking 107/192.

Notably, Vietnam's GDP (PPP) is currently below Australia and Poland, but is forecast to surpass them by 2029 with an absolute figure of about 2,343 billion USD. This means that Vietnam will enter the top 20 largest economies in the world after 5 years, on par with China, the US, India, Japan, Indonesia, Germany, Russia, Brazil, Turkey, the UK, France, Mexico, Italy, South Korea, Saudi Arabia, Spain, Canada, Egypt and Bangladesh.

Ho Chi Minh City Biotechnology Center Laboratory (continued)

This forecast by the IMF has far exceeded the research report “The World in 2050” by PricewaterhouseCoopers (PwC) released in 2017. Accordingly, PwC has forecast that by 2050, Vietnam’s GDP by PPP will reach 3,176 billion USD, ranking 20th in the world, surpassing Italy’s 3,115 billion USD (21st position), Canada’s 3,100 billion USD (22nd position), or Thailand’s 2,782 billion USD (25th position). Thus, in the eyes of the IMF, Vietnam can shorten nearly 30 years to reach this impressive milestone.

Economist, Dr. Vo Tri Thanh commented: Until the end of 2023, the world economy will still record a weak and uneven recovery among key economies. Production activities, from industrial output to investment and international trade activities, have all decreased. Increased geopolitical instability and slow inflation have forced most countries to continue tightening monetary policy. Many organizations forecast that the world economy this year and next year will still recover weakly and face many risks. The reason is the great challenge due to complicated developments after the Covid-19 pandemic and geopolitical instability still exists. In particular, Vietnam still maintains macroeconomic stability, inflation is not too high and the economic recovery rate is quite good. GDP in the second quarter of 2024 reached 6.93%, exceeding the scenario in Resolution 01 of the Government (5.5 - 6%), making international organizations clearly see the recovery potential and give more optimistic forecasts than the target set by Vietnam, with the whole year's growth around 7%.

Selex Motors factory in Bac Giang

“GDP growth shows that the size of the economy has become much larger, reflecting the recovery and a positive outlook on Vietnam's economic prospects. It can be seen that the size of Vietnam's economy has increased more than 100 times in 4 decades, from 4 billion USD to 430 billion USD in 2023, putting Vietnam in the group of upper middle-income countries. Stable development and attracting large investment will be the fundamental premise for Vietnam to achieve the goal of becoming a developed country by 2045. This also helps us gradually narrow the gap with countries in the region in the process of realizing the aspiration of becoming a prosperous country,” Dr. Vo Tri Thanh added.

The World Bank (WB) on August 26 released the Review Report - Update on Vietnam's economic situation. Reviewing macroeconomic factors, Mr. Andrea Coppola, chief economist of WB Vietnam, said that after the decline in 2023, since the beginning of this year, Vietnam has returned to high growth rates in some areas such as exports or industrial production, foreign direct investment (FDI) is also high... According to the WB's forecast, Vietnam's economy will grow by 6.1% in 2024 and 6.5% in 2025 and 2026, higher than the 5% in 2023. This forecast is higher than the previous report of the WB itself when it gave Vietnam's GDP growth rate in 2024 at 5.5% and 6% in 2025. Regarding opportunities, WB believes that, under the condition that exports continue to grow and real estate shows signs of recovery (after resolving the frozen corporate bond market and the Land Law taking effect from August), domestic demand is expected to strengthen in the second half of 2024 as investor and consumer sentiment improves. At the same time, the current account balance is forecast to remain in small surplus, while the government is returning to consolidating the budget balance, while inflation is forecast to decline from 4.5% in 2024 to 3.5% in 2026.

However, one of the main risks to economic growth is the uncertainty of global economic growth which may be lower than expected, especially the growth of Vietnam's major trading partners such as the US, EU and China.

Production line at Hoa Tho Textile and Garment Joint Stock Company (Da Nang City)

Associate Professor, Dr. Vo Dai Luoc, former Director of the Institute of World Economics and Politics, commented that Vietnam has many opportunities to promote economic growth as it has become a strategic partner of many large countries. This is an unprecedented opportunity, opening up many markets around the world for Vietnamese goods to accelerate their export to the world. At the same time, it also opens up opportunities to attract FDI capital flows. In the context that foreign corporations still apply the "China + 1" investment policy, Vietnam is considered a quite attractive destination. In addition, trade conflicts between many countries continue to be tense. Vietnam itself has a position in both politics and economics that many countries want to take advantage of as partners... This expert gave an example, South Korea has developed the country strongly in just 25 years, people have high income with a skyrocketing average income, so Vietnam has every opportunity to do this.

“We have many advantages to promote economic growth at a rate of 7%/year. If we can maintain this for the next few decades, the size of the economy will be very large and the ability to surpass many countries as predicted by the IMF can also be achieved. At that time, people's income will also increase much more, possibly entering the group of high-income countries,” Associate Professor, Dr. Vo Dai Luoc shared more.

A factory in Bac Giang

Sharing the same view, economic expert, Dr. Dinh The Hien, assessed that in recent years, the difficult world economy has greatly affected Vietnam. The country is also facing difficulties in some areas such as real estate and banking. However, the economy has gradually stabilized and by 2026, it will certainly accelerate more strongly when those problems have been resolved. Production and business sectors have begun to recover and grow, which is the main driving force for sustainable growth in the next phase of Vietnam's economy. Therefore, the expectation is that the annual GDP growth rate will reach about 7%/year and can be maintained for at least the next 10-15 years.

“Economic growth is driven by manufacturing activities, bringing higher added value and increasingly towards quality. If we look at China, which has had about 45 years of development with an average growth rate of 6-7%/year, Vietnam has many similarities, but the development period is only about 30 years. Notably, economic growth is like compound interest, the later the GDP scale will be very large. Entering the top 20 largest economies in the world is not a strange thing,” said Dr. Dinh The Hien.

Vietnam's economy will maintain high growth in the coming years.

Despite the rapid economic growth, Vietnam's GDP per capita currently ranks only 6th in the ASEAN region, after Singapore, Brunei, Malaysia, Thailand and Indonesia. Singapore's GDP per capita is 16 times higher than Vietnam's, and Brunei's is 8 times higher. One of the reasons pointed out by economic experts is that although Vietnam's economic scale surpasses these countries, per capita GDP is far behind because its population is much larger. Moreover, per capita GDP includes the output of foreign enterprises.

Therefore, Associate Professor Dr. Tran Dinh Thien, former Director of the Vietnam Economic Institute, believes that we should not be "hypnotized" by scale. The growth of Vietnam's economy is a good thing, but we need to pay attention to the structural aspects and how the quality of the economy has improved. Specifically, the current approach to breakthrough class changes, creating a breakthrough in Vietnam, especially for the domestic sector, is not clear and not strong. In the economic scale, we must take into account the structure in the direction: the Vietnamese part must account for a proportionate proportion. Meanwhile, the trend of dependence on the foreign sector of Vietnam is quite high. Therefore, the economy is expanding in scale but the quality is not increasing proportionally. The benefits enjoyed by the domestic market are slow and small, and this problem is becoming increasingly obvious and serious. One of the most obvious manifestations of this is that Vietnam's GDP is increasing but the profit paid to foreign investment is very large. Subtracting that part, GNP (total income of the people) is very little left. The more the development strategy expands GDP and GNP, the more worrying it is in the long term. Thus, the budget may be stable, the GDP figure may be good, but the people's lives and the health of Vietnamese enterprises do not improve much. This is something that needs special attention.

Laboratory of Ho Chi Minh City Biotechnology Center

We do not restrain or discriminate against the FDI sector and international trade, but we must create opportunities for the domestic sector to break out more. If we pursue large-scale expansion but the domestic sector remains slow and weak, it will foretell imbalance and more risks than successes in the future. Especially, in an era when the world is changing its structure very strongly, if Vietnam continues to be slow and hypnotized by scale, it will lead to many negative consequences for the quality of the economy.

“If we want Vietnamese enterprises to make a breakthrough, we must have incentives, ensure a freer competitive environment, and allow private enterprises to have easier access to more opportunities. When Vietnamese enterprises grow stronger, we should encourage them to participate more in production and business chains from the FDI sector with a medium-term vision, not just through short-term policies. On the other hand, we must build economic chains led by large Vietnamese corporations and enterprises, only then will we increase opportunities for Vietnamese small and medium-sized enterprises to access. Each industry must have at least 1-2 Vietnamese “eagles” to accompany foreign “eagles”. If we keep the domestic sector weak and low-class, it is not advisable,” Dr. Tran Dinh Thien suggested.

Sharing the same view, Associate Professor, Dr. Vo Dai Luoc cited the WB's comment in 2022 that institutions could become a major obstacle to realizing Vietnam's aspiration to become a high-income country by 2045. In fact, Vietnam's regulations and legal frameworks are still not synchronized and overlapping, thereby hindering the development of enterprises. Or the mechanisms to encourage domestic enterprises to start up and innovate, although much has been said, are rarely put into practice and have not been effective. Vietnam needs to create more open, transparent and synchronized mechanisms and policies from all levels and sectors so that enterprises can make a breakthrough and dare to think and do. When the business community really grows and expands its operations, the scale of the economy will of course increase. From there, the income of workers or people in general will also increase.

Thanhnien.vn

Source: https://thanhnien.vn/viet-nam-tien-vao-top-nen-kinh-te-lon-nhat-toan-cau-185240831230123375.htm