Vietnam Country profile

vietnam_country_profile.jpg

The macroeconomic outlook is solid. Growth has been driven by robust exports, which has supported manufacturing activity, elevated investment spending, robust foreign investment and steady domestic demand. Annual growth is projected to average over 6% over the next four years, due to robust domestic demand. Accelerating wage growth will support household spending, while ongoing deregulation will promote greater private investment. But risks to global trade from the US-China trade fracas will pose risks to the trade dependent economy.

Over the long term, Vietnam’s youthful population and low dependency ratio, along with its increasing shift into manufacturing, will drive growth. But the reliance on large, inefficient state-owned enterprises poses downside risks.

Figure

Greater industrialisation and a credit boom over the last decade have propelled Vietnam from a low-income country to one of lower-middle-income status. Vietnam would need to grow by over 10% per annum over the next decade to become an upper-middle-income country, which doesn’t seem likely.

Figure