For many years, when mentioning Vietnam, the World Bank says it is a success story.

According to the World Bank, economic reform starting in 1986 when Vietnam kicked off doi moi (renovation), plus favorable conditions in global trends have helped Vietnam quickly develop from a poor to a lower average income country.

With a firm foundation, Vietnam’s economy can show its resilience during crisis periods. Its economic growth rate is expected to reach 5.5 percent in 2024, higher than the 5 percent tin 2023.

Vietnam’s real GDP (gross domestic product) growth is expected to recover in the next three years and reach a pre-pandemic growth rate by 2026.

Currently, Vietnam is still a lower average income country. However, the opportunities for Vietnam to join the group of higher average income country are nearing.

According to the World Bank, in 2023, Vietnam’s GDP was $430 billion and its average income per capita was $4,347.

These were very high figures compared with the GDP per capita of just $100 when the country began opening the economy (1988) and the $1,000 when Vietnam joined the World Trade Organization (WTO) in 2007. Economists all agree that the GDP per capita in Vietnam has been growing rapidly, and more rapidly than some regional countries, including Thailand and the Philippines.

Under the new classification method, in July 1, 2023 - July 1, 2024, countries’ average income per capita was classified into four groups.

Group 1 consisted of countries with average income per capita of less than $1,135 per annum. They were low income countries.

Group 2 consisted of countries with incomes per capita of $1,136-4,465. They were lower average income countries.

Group 3 consisted of countries with income per capita of $4,466-13,845. They were higher average income countries.

The countries belonging to Group 4 had income per capita of over $13,845, and they were high income countries.

In 2023, with income per capita of $4,347, Vietnam was still listed among lower average income countries.

Meanwhile, from July 1, 2024 onwards, countries with higher average incomes have GDP per capita of $4,516-14,005

If Vietnam obtains a GDP growth rate of 6.5 percent in 2024 as expected and the population increases moderately, each Vietnamese person will have an average of $280 more, high enough for Vietnam to join the group of countries with higher average income.

Breakthroughs in exports, FDI

Since the first FTA (free trade agreement) Vietnam signed 30 years ago (with ASEAN), Vietnam has signed, implemented, and is negotiating for 19 FTAs. Of these, 16 FTAs are under implementation and 3 are under negotiation.

The latest FTA, signed with Israel in 2023, has led to high openness in free trade areas with over 60 economies. Vietnam is the only country which signs FTAs with all large economies, including the US, Japan, China, the EU, UK and Russia. 

FTAs are likened to highways on which Vietnam can go faster to integrate into the world economy more deeply. Vietnam’s total import-export turnover in 2023 was estimated at $683 billion, including $354.5 billion of exports and $328.5 billion of imports.

These are encouraging results, if noting that the total import-export turnover was just $100 billion in 2007 and $30 billion in 2001.

Vietnam also takes pride in being a favorite destination for foreign investors. In 1991, Vietnam attracted $2.07 billion worth of FDI (foreign direct investment), while the figure surged to $487 billion in 2023.

Many multinationals have a presence in Vietnam, including Samsung, Intel, Microsoft, Toyota, Honda, KFC and Starbucks, and they have expressed willingness to expand their business and make long term investments in Vietnam.

The contributions by the foreign invested economic sector to Vietnam’s national economy have been increasing rapidly, by 17.0 percent, 17.8 percent, 18.7 percent and 18.8 percent in the years from 2016 to 2020.

The foreign invested sector is always the most dynamic sector of the economy with the value added growth rate higher than the country’s GDP growth rate. 

Tu Giang - Lan Anh - Manh Ha