Over the past 30 years, Vietnam has had a remarkable development record. Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower middle-income country.
Vietnam’s economy continues to show fundamental strength, supported by robust domestic demand and export-oriented manufacturing. The extreme poverty rate is estimated to have declined to below 3 percent. Following 6.8 percent growth in 2017, preliminary data indicate that GDP growth accelerated to 7.1 percent in 2018, underpinned by a broad-based pickup in economic activity.
Vietnam’s medium-term outlook is broadly favorable, and downside risks are tied to weak external demand, shifting trade patterns, global financial volatility, and incomplete banking and state-owned enterprise (SOE) reforms. On the upside, Vietnam is strongly positioned to benefit from numerous free trade agreements that are coming into force now and over the forecast period.
Vietnam’s growth is projected to moderate to 6.6 percent in 2019, driven by credit tightening, slower private consumption and weaker external demand. Inflationary pressures are projected to remain moderate, due to subdued global demand conditions and moderate global energy and food prices. Over the medium term, growth is projected to stay around 6.5 percent, as the impact of current cyclical uptick dissipates. Poverty is expected to decline further, as labor market conditions remain favorable.
Vietnam is experiencing rapid demographic and social change. Its population reached about 97 million in 2018 (up from about 60 million in 1986) and is expected to expand to 120 million before moderating around 2050. Currently, 70 percent of the population is under 35 years of age, with a life expectancy of nearly 73 years. But the population is rapidly aging. There is an emerging middle class—currently accounting for 13 percent of the population but expected to reach 26 percent by 2026.
Over the last thirty years, the provision of basic services has significantly improved. Vietnam is today a significantly more educated and healthy society than 20 years ago, and these qualities are equitably distributed. Coverage and learning outcomes are high and equitably achieved in primary school—evidenced by remarkably high scores in the Program for International Student Assessment (PISA), where the performance of Vietnamese students exceeds that of many OECD countries.
Vietnam is ranked 48 out of 157 countries and territories in terms of human capital index (HCI), second in ASEAN behind Singapore. A Vietnamese child born today will be 67% as productive when she grows up as she could be if she enjoyed complete education and full health.
Access to household infrastructure has improved dramatically. In 2016, 99 percent of the population used electricity as their main source of lighting, up from 14 percent in 1993. Rural access to clean water has also improved, up from 17 percent in 1993 to 70 percent in 2016. Access to these services in urban areas is above 95 percent.
Gender gaps are narrowing. In 2015, female-headed households in Vietnam were less likely to be poor than male-headed households and primary and junior secondary school net enrolment rates are practically equal for boys and girls. There are more female students attending school than male at the upper secondary and tertiary education levels. From 1990 to 2015, the maternal mortality rate fell from 233 to 58.3 deaths per 100,000 live births and infant mortality dropped from 44 deaths per 1000 live births to 15—with no difference between male and female infants. Women’s economic empowerment has also steadily improved in Vietnam over the past decade. Women’s labor force participation rate is within 10 percent of that of men, a smaller gap than that found in most other countries. In addition, there has been an upward trend in the share of women in wage work, mostly driven by increased employment opportunities for women in foreign-owned export-oriented factories.
Nevertheless, some gaps persist—particularly pertaining to women’s access to high level leadership positions and women ethnic minorities.
lastupdated: Apr 24, 2019