Vietnam GDP exceeds Singapore but per capita income far lower

Vietnam has surpassed Singapore in GDP. However, only when the Vietnamese income per capita increases will people be able to truly rejoice.

The government’s report on the socio-economic situation in 2020 says that Vietnam’s GDP is estimated to grow by 2 percent and that Vietnam is striving for a 3 percent growth rate.

Vietnam GDP exceeds Singapore but per capita income far lower

Vietnam has the highest positive growth rate among the five large economies in Southeast Asia, and is one of the 16 most successful emerging economies in the world.

In 2016-2019, Vietnam had high GDP growth rates. In 2018, the figure was 7.08 percent, the highest in the last 13 years.

However, the National Assembly’s Economics Committee commented that growth quality has not improved significantly.

The application of science and technology plays an increasingly important role in improving productivity and therefore, production efficiency.

However, training human resources, attracting investment and financial resources for scientific research, and transferring and mastering advanced technologies are the issues that need more thorough analyses.

Meanwhile, the GDP per capita in 2020 is estimated at $2,750, far below the target of $3,200-3,500.

Vietnam is striving to be a developing country with modern industry, belonging to the upper group of higher average-income countries by 2030, and to ultimately be a developed country with modern industry and high income.

Therefore, the committee asked to clarify the reasons behind this, including the impact of the pandemic, and find reasonable solutions for the next period. Some analysts say the GDP still cannot fully reflect the current state of the economy, so it is necessary to calculate GNI as well.

Vietnam is striving to be a developing country with modern industry, belonging to the upper group of higher average-income countries by 2030, and to ultimately be a developed country with modern industry and high income.

The International Monetary Fund (IMF) has predicted that Vietnam’s GDP would reach over $340 billion by the year end.

This means that the scale of Vietnam’s economy would be larger than Singapore ($337 billion) and Malaysia ($336 billion). IMF also predicted that GDP income per capita would increase from $3,416 last year to nearly $3,500 this year.

Nguyen Duc Thanh, former director of the Vietnam Institute of Economic and Policy Research (VEPR), said at the recent macroeconomic report launching ceremony that Vietnam’s nominal GDP is higher than Singapore and Malaysia, but the two countries have a low population, while Vietnam has a population of 100 million.

“This is just like a family which has many unskilled laborers, and has relatively high total income. Meanwhile, the next door family has only one or two members but also has the same income,” Thanh said.

“Therefore, the GDP doesn’t have much significance, because the Vietnamese income per capita is still low and is just higher than Myanmar, Laos and Cambodia,” Thanh said.

 

“Anyway, the GDP of a country can show a certain role as an entity in ASEAN and it will make a greater contribution and play a bigger role in ASEAN,” he said.

Mentioning the target of being among the upper group of the higher average income countries by 2030 and a developed country with modern industry and high income by 2045, Thanh said this will be a difficult task, but it is not impossible. In order to reach these goals, Vietnam will have to make every effort.

Opportunities

Dinh Tuan Minh, a respected economist, said that for a developing country like Vietnam, all the crises like the ongoing one are opportunities for it to catch up with other countries when the crises are over.

However, this will be attainable only if the developing country can minimize the negative impact from the crises and accumulate energy to rise in the next stage.

As for the targets for 2030 and 2045, Minh said they are ‘ambitious’, but it is worth seeing how Vietnam can overcome this crisis in order to rise up in the race among developing countries to reach higher levels.

Minh said the pandemic is causing an economic crisis and is creating a burden on public debt. The countries which, for various reasons, have to spend a lot on epidemic prevention and social security will suffer in the long term.

The debts will be still there. They won’t disappear and will burden the economies for a long time. Therefore, it is necessary to raise taxes and cut expenditures on public investments and other social security in the future to pay debts.

“This means that countries abusing fiscal policies to support people and businesses to ease the impact of the pandemic will have to pay for this in the future,” he said.

He said that if Vietnam can come up with policies to foster fundamental elements, it will have a very good chance for development in the coming time. These are tax reform and an innovation-based economy.

In addition, the Government needs to promote the private sector because this is the most dynamic force.

It also needs to reform public services and rely more on the market economy so that Vietnam can develop and create resistance to crises in the future.

Pham The Anh from National Economics University also thinks the Covid-19 pandemic must not be the reason for Vietnam to delay fundamental reforms, especially reforms in the budget and business environment. 

Luong Bang

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