[8 Jan 2024] — Vietnam is anticipated to ascend to the ranks of the Top 25 economies in the World Economic League Table (WELT) rankings by 2038, according to the Centre for Economics and Business Research (CEBR).
Vietnam's GDP is forecast to grow at an average of 6.7 per cent between 2024 and 2028. Over the subsequent nine years, the CEBR forecasts that the Vietnamese economy will expand by 6.4 per cent on average each year. Over the next 15 years, Vietnam is also predicted to move swiftly up the World Economic League Table rankings from its 34th spot last year, to 21st in 2038.
Currently classified as a lower-middle-income country, Vietnam had an estimated GDP per person of $14,285 in 2023, adjusted for the cost of living. Following the economy's expansion by 8 per cent in 2022, growth was expected to have slowed to 4.7 per cent last year but remains above average, leaving 2023 output at 19.3 per cent above 2019.
Vietnam did not experience the same growth-inflation trade-off as many other economies last year, and its robust growth occurred alongside a modest 3.4 per cent inflation. The estimated growth in consumer prices over the previous 12 months stood below the average inflation rate seen in the ten years up to 2021 of 3.8 per cent. The State Bank of Vietnam has stated that inflation has been controlled and with room to manoeuvre, the monetary policy has been loosened.
An important component of the economy's strong performance in 2023 was the tightness of the labour market. The unemployment rate fell by an estimated 0.2 percentage points to 2.1 per cent in 2023, providing a boost to consumer spending.
Public finances are in good shape, with government debt as a share of GDP expected to stand at 34 per cent for last year, down from over 35 per cent the previous year. The government was restrained with its fiscal policy in 2023, as public sector borrowing stood at an estimated 1.3 per cent of GDP.
In addition, turbulent geopolitical events have presented Vietnam with an opportunity as global firms move parts of their supply chain to Vietnam from China as part of ‘de-risking’ initiatives. US imports from Vietnam have risen almost 2 percentage points since the start of the US-China trade war in 2018. This has also been complemented by continued foreign investment from other Asian economies, including China.
The CEBR forecasts Vietnam will climb one place to 33rd in the WELT rankings this year, with a GDP of $462 billion.
With demographics on its side, it seems plausible that Vietnam may achieve its stated goal of becoming a high-income country by 2045. This is alongside Vietnam’s pledge to reach net-zero emissions by 2050, though this is not yet enshrined in law – The Vietnam Investment Review.