Source: World Bank
Vietnam’s development record over the past 30 years is remarkable. 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 is performing well, propelled by the sustained global recovery and continued domestic reforms. Robust growth is boosting job creation and income growth, leading to broad-based welfare gains and poverty reduction. Vietnam’s gross domestic product (GDP) is estimated to have increased by 7.1 percent (y/y) in the first half of 2018. GDP growth was broad-based, led by strong manufacturing growth of 13 percent, bolstered by strong external demand. Agriculture output growth also accelerated to 3.9 percent largely due to strong performance in the export-oriented fishery subsector. Meanwhile, expansion of the service sector remained robust at 6.9 percent underpinned by strong underlying retail sector growth supported by buoyant private consumption and record tourist arrivals.
Vietnam’s medium-term outlook has improved further. Real GDP is now projected to expand by 6.8 percent in 2018 before moderating to 6.6 percent in 2019 and 6.5 percent in 2020 due to the envisaged cyclical moderation of global demand. Despite reduced slack in the economy, inflation is expected to remain around the 4 percent government target, predicated on some tightening of the monetary stance to counter price pressures emanating from domestic input price pressures and rising global commodity prices. On the external front, the current account balance is projected to remain in surplus, but start narrowing from 2019, reflecting widening deficits on the income and services accounts. Fiscal consolidation is expected to contain public debt over the projection period.
Vietnam is experiencing rapid demographic and social change. After years of growth, Vietnam’s population reached about 95 million in 2017 (up from about 60 million in 1986) and is expected to expand to 120 million before tailing off around 2050. Currently, 70 percent of the population is under 35 years of age, with a life expectancy of close to 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 twenty 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. From 1993 to 2012, infant and under-five mortality rates were reduced from 33 to 19 and 45 to 24 per thousand births respectively. Stunting also significantly decreased over the same period, from 61 to 23 percent, and life expectancy at birth has increased from 71 to 76 years.
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. In rural areas, in 2016, 77 percent of the population had access to sanitation facilities—compared to 36 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 boy and girl 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, which is 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. There is also a significant imbalance in the sex ratio at birth.
Last Updated: Oct 5, 2018