Vietnam recorded strong GDP growth of 8.02% in 2025, according to data from the General Statistics Office. However, the country’s electricity consumption rose only 4.9% compared to 2024, raising questions over the long-held assumption that power demand must grow faster than GDP.

The data, released at a press conference on January 5, was echoed by a report from the Vietnam Electricity Group (EVN), which noted that commercial electricity output in 2025 reached 287.85 billion kWh-up just 4.9% year-on-year.

This divergence signals a notable shift in Vietnam’s economic structure. The electricity-to-GDP elasticity ratio-defined as the percentage change in electricity demand relative to GDP growth-fell below 1 in 2025. Historically, this ratio hovered around 1.7 to 2, meaning power demand typically outpaced GDP.

Why electricity growth fell behind GDP

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In 2025, GDP is estimated to grow by 8.02%, while commercial electricity output increases by only 4.9% compared to 2024. Photo: Hoang Giam.
 
 

Addressing the issue at the briefing, Phi Thi Huong Nga, Head of the Industrial and Construction Statistics Department, explained several contributing factors.

In 2025, while infrastructure investment projects were robustly promoted under government directive, such projects typically require less electricity compared to heavy industrial manufacturing, which accounts for over 50% of total power usage.

Weather also played a key role. The year saw fewer heatwaves and more frequent storms and flooding across provinces, reducing residential power consumption.

Moreover, decentralized solar power saw rapid expansion. Data from EVN and the Ministry of Industry and Trade indicates that rooftop solar and self-generated electricity significantly reduced demand on the grid. An estimated 10 billion kWh-about 4% of total commercial electricity-came from self-consumed solar systems in 2025.

Breakdown of electricity consumption in 2025

Within the 4.9% overall increase:

·        Agriculture, forestry, and fisheries used 3.5% of electricity, with 1.1% growth

·        Industry and construction-53% of total demand-increased usage by 7.2%

·        Hotels and restaurants (5.4% of demand) rose 4.8%

·        Residential consumption (33.7% of total) grew by just 1.1%

“This modest rise in residential power usage, despite its large share, helped pull down overall growth,” said Nga. “However, factoring in self-generated power from large industrial sites, industrial electricity use may have actually grown by around 12%, fully aligning with industrial sector growth.”

Elasticity ratio shows improving efficiency

Echoing this view, economist Associate Professor Dr. Ngo Tri Long noted that the decoupling trend has been underway for years.

Between 2000–2010, the elasticity ratio stood at 1.7–2. From 2011–2019, it dropped to 1.2–1.4. Between 2021–2024, it hovered around 1.0–1.1, and in 2025 it fell below 1 for the first time.

Long emphasized that this shift reflects increased efficiency in electricity use, particularly in industry and residential sectors.

For instance, the elasticity ratio in industrial production dropped to 0.83 during 2021–2024. In residential consumption, it declined from 1.54 (2011–2015) to 1.27 (2021–2024).

The trade and service sector, while showing fluctuations, only accounts for 8.8–10.5% of total electricity demand.

No longer an anomaly, but a sign of maturity

“Claims that power consumption must always rise faster than GDP were only true during Vietnam’s heavy industrialization phase,” said Long. “Today, with a more mature and efficient economy, electricity demand doesn't have to grow at the same pace.”

He called the trend “a positive development, not a concern,” indicating a qualitative shift toward more sustainable and power-efficient economic growth.

Tam An & Nguyen Le