Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Vietnam is one of the fastest growing countries in the world and its economy has shown resilience to trade wars and slower growth rates in neighbouring China. This accelerated economic pace is due to labour shifting from agriculture to manufacturing and services, private investment, a strong tourist sector, higher wages, and accelerating urbanisation. Exports constitute an increasingly significant contribution to Vietnam's GDP and certain sectors, such as industrial production, textile, electronics and seafood production have been growing rapidly. Growth reached a 10-year high of 7.2% in 2019 and due to the outbreak of the COVID-19, dropped but remained in positive territory in 2020 with 2.9%, 2021 with 2.6% and then 2022 with 7%. According to the updated IMF forecasts from January 2023, GDP growth in Vietnam is expected to reach 6.2% in 2023 and 6.6% in 2024, subject to the post-pandemic global economic recovery.

According to the IMF, government debt reached 41.7% of GDP in 2020, 39.7% in 2021 and 40.2% in 2022. It is expected to stabilise at 40.5% and 40.8% in 2022 and 2023. This limited increase is a result of tightening monetary policies and limits on new government guarantees. Inflation reached 1.8% in 2021 from 3.2% in 2020, and 3.8% in 2022. It is forecast to average 3.9% in 2023 and 3.5% in 2024 by the latest World Economic Outlook of the IMF (January 2023). Diversified trade structure, rising wages and domestic consumption are the backbone of the Vietnamese economic growth. Nonetheless, labour costs remain competitive, which help attract foreign investments to the country. Economic challenges include lack of infrastructure, business climate shortcomings, pending public sector reforms, growing inequality, a weak banking system. Tax reforms and privatisation of state-owned companies helped compensate the budget deficit in 2021 which stayed below 4% of GDP (Financial Post, 2022). Around 40% of Vietnam's debt has medium or long-term maturity, a significant risk considering 40% of said debt is denominated in foreign currencies and represent a currency risk. Nonetheless, public authorities continue to intervene in both directions to keep the Dong within a narrow band against major international currencies and accrue foreign reserves.

The unemployment rate in Vietnam remains particularly low. It reached 2.7% in 2021 from 2.5% in 2020 and 2.4% in 2022. It is expected to reach 2.3% in 2022 and 2023 (IMF, January 2023). Social challenges include poverty reduction, improving higher education, and allowing freedom of the press. Transparency International ranks Vietnam as 77th out of 180 countries in its Corruption Perceptions Index 2022, from the 87th spot a year earlier.

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