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| Ho Chi Minh City is the largest economic center of Vietnam. (Source: Shutterstock) |
The economic growth target set by the 13th National Party Congress for the 2021-2026 term is about 6.5-7%/year. Halfway through the term of implementing the Congress Resolution, with the efforts of the whole country, the Vietnamese economy has overcome many difficulties and challenges, achieving encouraging results.
Bright Spot in the Gray Picture
It can be said that since the 13th National Party Congress, the economy has faced many difficulties, some of which were unprecedented. However, this challenging time has demonstrated the joint efforts and solidarity of the entire political system, all levels, sectors, localities, the business community and the people.
In particular, the timely strategic shift, with the timely promulgation of Resolution 128, has changed the situation, both in the fight against the pandemic and in socio-economic development. The careful shift from “zero Covid” to safe and flexible adaptation, effective control of the pandemic, opening up, and economic recovery, not only demonstrates the effectiveness of economic development policy management, but also the important meaning of focusing on people, taking people as the center - the subject, resource and goal of development.
The prolonged Covid-19 pandemic has caused serious consequences, climate change, natural disasters, increasingly fierce strategic competition between major countries, the conflict between Russia and Ukraine has become complicated; most supply chains have been broken, most industries and fields have been seriously affected; high inflation, countries have tightened monetary policies, increased interest rates leading to a decline in growth and increased risks in international financial, monetary, and real estate markets... deeply affecting political, economic, and social security on a global scale.
Over the past three years, Vietnam has focused on solving newly arising complex problems while dealing with weaknesses and backlogs from many years ago... Vietnam remains steadfast and continues to achieve important results, promoting socio-economic recovery and development, continuing to build an independent and self-reliant economy associated with proactive, active international integration, deeply and effectively.
The International Monetary Fund (IMF) commented that “Vietnam is a bright spot in the gray picture of the global economy” as it still maintains its growth momentum. Vietnam’s economy is ranked among the countries with the highest growth rates in the region and globally.
In fact, in 2021, economic growth reached 2.56%, while many economies in the world had negative growth; In 2022, it reached 8.02%, much higher than the plan of 6-6.5%, a high increase compared to countries in the region and the world; GDP growth in the first half of 2023 reached 3.72%, but according to forecasts, the whole year can still reach from 6 to 6.5%.
Exports and tourism have become the brightest spots of the “multi-colored economic picture” throughout the first half of the 13th Party Congress term.
In 2022, export data (turnover, trade surplus, commodity structure and market recovery) all show positive growth potential. Total import-export turnover reached over 732.5 billion USD, up 9.5% over the previous year, of which exports increased by 10.6%; trade surplus reached 11.2 billion USD; some industries reached the target set by the Government earlier than expected.
| Prestigious international credit rating organizations have maintained and upgraded Vietnam's credit rating. Moody's upgraded Vietnam's long-term national credit rating from Ba3 to Ba2, with a "stable" outlook. S&P upgraded it from BB to BB+, with a "stable" outlook. Fitch maintained it at BB with a "positive" outlook. |
Tourism data in 2022 continues to increase dramatically, creating strong momentum for the recovery of this potential economic sector. If the number of international visitors reaches 3,661,200, a record 23.3 times higher than the previous year, 2022 will also be a boom year for domestic tourism, reaching 101.3 million, an increase of 168.3% compared to the plan, exceeding the pre-pandemic level.
Total social investment capital increased by 11.2% compared to the previous year, reflecting the strong recovery of production and business activities. More than 143 countries and territories have invested in Vietnam. Notably, investment from some major partners such as Singapore, Japan and South Korea has increased annually.
Not only increasing in quantity, the business community in Vietnam is also striving to adapt flexibly and respond quickly to unexpected fluctuations in the international and domestic environment; quickly joining in and seizing opportunities in the 4.0 industrial revolution and digital transformation, to operate effectively and explore new, green, sustainable and intellectually intensive directions.
That is why Vietnam is continuously recognized internationally in new positions. In 2022, Vietnam officially became the fourth largest economy in ASEAN and the 40th in the world, with international trade in the Top 20 globally, and is one of the economies considered to be the most dynamic and open in the world.
With a clear and correct economic development and diplomatic policy in today's volatile world, the results achieved in the past half term have created a basis for belief that the country's economy will achieve the goals of the entire 2021-2025 period set forth in the Resolution of the 13th National Party Congress.
The time has come
The Financial Times (UK) recently published an analysis stating that after decades of promise, the time for Vietnam’s economy to change has come. Vietnam needs to take advantage of the boom in manufacturing, invest in areas rich in intelligence and high productivity for long-term, sustainable development.
In 2022, foreign direct investment (FDI) into Vietnam increased to more than 20 billion USD - the highest level in a decade. Many of the world's leading names such as Dell, Google, Microsoft and Apple have moved part of their supply chains to Vietnam and are gradually shifting more strongly as part of the "China +1" policy. Foreign businesses are seizing the opportunity to diversify their supply chains as labor costs and political risks in China increase.
Vietnam’s economy is now at a critical juncture. In the short term, to continue attracting investment, Vietnam needs to strengthen its business environment. In the long term, to meet its ambitious goal of becoming a high-income economy by 2045, the government needs to leverage manufacturing growth to diversify the economy.
Over the next decade, Vietnam will need to increase its manufacturing capacity to meet the growing demands of foreign investors’ business plans. Its young population structure provides an abundant labor force, but the demand for skilled workers is increasing. Vietnam’s education system needs to improve the quality of vocational training and higher education.
Vietnam was ranked 30th in the 2022 list of the world's most powerful countries by the US News & World Report, with an estimated GDP of 363 billion USD and GDP per capita of 11,553 USD. The ranking is based on an average score calculated from five factors related to a country's power: leadership, economic influence, political influence, international alliances and strong military... |
In addition, according to the Financial Times analysis, Vietnam needs to cut regulations and procedures and upgrade infrastructure. Special attention should be paid to the power grid, which is under pressure from growing industrial demand.
The goal of becoming a high-income country is not easy. Since the late 1990s, Malaysia and Thailand have followed a similar trajectory to Vietnam today. However, the “middle-income trap” is a challenge that is not easy to overcome.
As Vietnam’s economy grows, so will wages. Vietnam cannot rely on its low-cost model forever. Its dependence on export-led growth will also leave it vulnerable to a volatile global trade environment.
Over time, Vietnam will need to reinvest to support the development of more productive, labor-intensive sectors to achieve its goal of becoming a high-income country. The services that underpin the economy, such as finance, logistics, and legal services, create skilled jobs and add value to existing industries.
The World Bank (WB) recommends that Vietnam provide more support for technology adoption, enhance management skills and continue to reduce barriers to FDI in the service sector.
The excitement among investors in Vietnam is understandable. But Vietnam has much work to do to turn today’s “risk-off” trend into long-term prosperity.
Plan to implement the National Master Plan for the period 2021-2030, vision to 2050:- Strive for an average national GDP growth rate of about 7%/year in the 2021-2030 period. - By 2030, GDP per capita at current prices will reach about 7,500 USD. - By 2050, Vietnam will become a developed country with high income, a fair, democratic and civilized society. A synchronous and modern infrastructure system. A smart, modern, unique and green urban system. |
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