Under the World Bank's latest classification, Vietnam's gross national income (GNI) per capita increased from US$4,490 in 2024 to US$4,970 in 2025, representing growth of nearly 10.7% and officially placing the country in the upper-middle-income category. It took Vietnam approximately 17 years, from 2008 to 2025, to move from the lower-middle-income group to the upper-middle-income group.

This achievement is particularly significant for an economy that was once among the world's poorest. Over nearly four decades of reforms, Vietnam has successfully transitioned toward a market-oriented economy, opened its doors to international trade, attracted substantial foreign direct investment (FDI), integrated deeply into the global economy, and maintained robust economic growth over an extended period.

However, even greater challenges lie ahead. Countries such as Brazil, Malaysia, Thailand, Argentina and South Africa have remained in the middle-income category for decades without reaching high-income status, largely because productivity growth slowed, reforms lost momentum, and competitive advantages gradually diminished.

Vietnam, however, possesses several advantages that many middle-income economies do not.

These include a stable political environment, a strategic position at the heart of Asia's supply chains, one of the world's most extensive networks of free trade agreements, continued strong inflows of foreign direct investment, and a population exceeding 100 million. According to United Nations projections, Vietnam's population is expected to continue growing for roughly another two decades before entering a period of decline.

At the same time, the government is pursuing an ambitious strategy centered on double-digit economic growth, major infrastructure investment, digital transformation, the digital economy, semiconductors, artificial intelligence (AI), logistics, financial services, and private-sector development. These are all critical drivers for improving productivity - the decisive factor in helping Vietnam escape the middle-income trap.

The experiences of South Korea, Singapore and Ireland demonstrate that success depends not only on rapid growth but also on growth quality, innovation capacity, education, workforce quality, and institutional reform.

When could Vietnam become a high-income economy?

According to the World Bank's latest classification, released in 2026 based on 2025 GNI data, economies with GNI per capita above US$14,375 qualify as high-income countries. However, this threshold typically rises by around 2% annually, reflecting global inflation.

Assuming Vietnam's real GNI expands by an average of 10% per year, inflation averages 4%, population growth remains at 0.4%, and the Vietnamese dong depreciates against the US dollar by roughly 2% annually, GNI per capita would increase from US$4,970 in 2025 to approximately US$8,640 in 2030, US$15,020 in 2035, and US$26,130 by 2040.

Meanwhile, if the World Bank's high-income threshold continues rising by around 2% annually, it would reach approximately US$17,523 in 2035 and about US$19,348 in 2040.

Under this scenario, Vietnam would remain below the threshold in 2035. However, by 2037, when GNI per capita is projected to reach around US$18,740, it would exceed the World Bank's estimated threshold of US$18,231, officially placing the country in the high-income category. By 2040, projected GNI per capita of US$26,130 would comfortably exceed the estimated minimum threshold of US$19,348.

This is an optimistic scenario, as it requires Vietnam to sustain 10% real economic growth for more than a decade while maintaining stable inflation and avoiding significant exchange-rate volatility.

Under a more conservative scenario, in which real GNI grows by 8% annually while the remaining assumptions stay unchanged, Vietnam's GNI per capita would reach approximately US$19,870 by 2040. That would still exceed the World Bank's projected high-income threshold of US$19,348, suggesting that Vietnam could still enter the high-income group around 2040.

This outlook is achievable if Vietnam continues to improve institutional quality, strengthen the investment and business environment, develop a highly skilled workforce, promote innovation, capitalize on the global supply-chain realignment, expand high-tech industries, and ensure that major infrastructure projects generate strong economic returns.

Nevertheless, the path ahead will not be easy. Vietnam still faces significant risks, including rising public debt if investment proves inefficient, inflation that could weaken purchasing power, relatively low labor productivity, continued dependence on the FDI sector, the danger of becoming trapped in low-value manufacturing and assembly activities, global economic uncertainty, and the possibility that institutional reforms may fail to keep pace with development needs.

Achieving upper-middle-income status is only the first milestone. To realize its goal of becoming a high-income economy by 2045, Vietnam will need to sustain rapid growth while implementing deep structural reforms that shift its development model from one driven primarily by capital and labor toward one powered by productivity, technology, innovation, and higher value creation. Only then can the country truly overcome the middle-income trap.

Manh Ha