However, when approaching this article from a substantive economic analysis perspective and a constructive spirit, we need to place these numbers in the proper context of methodological structure, the nature of the PPP indicator, as well as the per capita equation and the consumer goods basket.

GDP (PPP) is a tool designed to equalize price level differences across countries through the concept of the "Law of One Price" and a standardized consumer basket.

The nature of domestic price adjustments: Nominal GDP calculated at market exchange rates often underestimates the economic scale of developing countries, where prices of non-traded goods and services (such as haircuts, basic healthcare, budget dining, and local rent) are significantly cheaper than in developed nations. 

When converted via PPP, 1 USD spent in Vietnam buys a significantly higher volume of goods and services than 1 USD spent in the US, Australia, or Switzerland.

Limitations of the PPP goods basket during integration: The PPP goods basket proves highly effective for essential domestic consumer goods. However, in an open global economy, a nation's actual purchasing capacity for international goods (technology imports, production machinery, energy, high-end pharmaceuticals, overseas travel, or study abroad expenses) depends directly on nominal GDP in USD, rather than PPP.

Vietnam's total GDP (PPP) scale reaching over $2 trillion confirms a large domestic market capacity and strong internal consumption of basic goods, but it does not equate to international financial strength comparable to developed economies.

A larger total GDP (PPP) scale does not signify higher per capita income or living standards. This represents the most critical point requiring clarification when analyzing data from several nations below:

The "large population size" effect: Vietnam currently has approximately 101 million people, nearly 4 times Australia's population, 11 times Switzerland's, and 1.4 times Thailand's. A country of 101 million people reaching a total PPP economic scale equal to or exceeding a country of 27 million people (Australia) or 9 million people (Switzerland) is a natural result of population scale advantage.

Actual living standards on a per capita basis: Vietnam's per capita GDP (PPP) currently equals roughly 1/4 of Australia's, 1/5 of Switzerland's, and about 70 to 75 percent of Thailand's. This reflects that the average labor productivity and value added per capita maintain a relatively wide gap.

Vietnam’s GDP (PPP) scale and ranking are encouraging, but these figures should also be viewed as a milestone for assessing what needs to be done to turn “scale” into “quality.”

Shifting from extensive to intensive growth: GDP (PPP) growth over much of the past period has been driven largely by population size during the “golden population” period and labor-intensive FDI inflows. To raise GDP per capita substentially, Vietnam needs to focus on improving total factor productivity (TFP), developing supporting industries and moving up the value chain in global supply chains.

Improving the quality of the consumer basket and public services: Strong purchasing power parity in essential goods such as food and basic necessities helps ensure basic social welfare. 

However, people’s quality of life also depends heavily on the basket of public goods and services, including transport infrastructure, air quality, the public healthcare system, higher education and social security. These are areas that require very large amounts of nominal capital investment from the state budget.

The middle-income trap: Thailand is currently grappling with the middle-income trap and rapid population aging. Vietnam’s overtaking Thailand in total PPP economic size is an opportunity, but if the country fails to take advantage of the remaining golden population period, expected to end within the next 10-15 years, to raise nominal per-capita income, it could also face the risk of growing old before becoming rich.

Forecasts from a reputable international organization such as the IMF that Vietnam will rise to second place in Southeast Asia and enter the global top 22 in terms of total GDP (PPP) provide clear evidence of the vitality, dynamism and growing market size of Vietnam’s economy.

Nevertheless, the healthiest and most realistic way to view the figures is torecognize the scale, but focus on quality.

Overtaking Australia or Thailand in total PPP economic size is only a first step. The long-term goal and real challenge lie in narrowing the gaps in labor productivity, per-capita income and actual quality of life for more than 100 million Vietnamese people.

Bui Trinh