26/04/2023 - Viet Nam is one of the few countries in Southeast Asia to have avoided a COVID-19 recession, thanks to its capable management of the crisis and sound economic policies. It is important now to work on reforms to ensure continued economic and social progress and keep the economy resilient to external and domestic challenges, according to a new OECD report.
The OECD’s first Economic Survey of Viet Nam projects robust GDP growth of 6.5% in 2023 and 6.6% in 2024, although risks are tilted to the downside. It notes that, despite an increase, inflation remains well below levels in many OECD countries, at 4.3% over the year to February 2023 for headline consumer price inflation, against 8.8% on average in OECD countries. At the same time, the openness of Viet Nam’s economy leaves it exposed to geopolitical uncertainties and potential supply chain disruptions.
“Viet Nam’s strong economic growth has led to remarkable social progress over recent years, and its economy has been resilient to shocks,” Acting Deputy Director of the OECD’s Economic Country Studies Branch, Vincent Koen said, presenting the Survey in Ha Noi. “Further reforms to improve the business climate, spur competition, and expand the pension and welfare system are necessary for Viet Nam to continue on its path of economic and social progress and to fully benefit from its deep integration in global trade.”
Viet Nam has seen a dramatic reduction in poverty over the past three decades, bringing down its poverty rate from 80% in 1992 to 7% just before the COVID-19 crisis. Per capita GDP relative to the OECD average more than doubled over the past two decades, approaching 25%. Nevertheless, for the years ahead, a rapidly ageing population will start to weigh on economic growth and public finances, particularly as Viet Nam will need to expand its low public pension coverage. To continue lifting living standards it will be necessary to raise tax revenues to fund growing spending needs, including greater social protection coverage, while boosting labour productivity and business dynamism and reducing labour market informality.
The digital transition is also crucial for Viet Nam’s future prosperity. Digital innovations can be transformative for emerging markets as they can be applied and diffused more quickly than advances in more traditional sectors. Viet Nam’s government aims to expand the digital economy to account for 30% of GDP by 2030, compared to approximately 7% of GDP at present, by improving quality infrastructure, e-government and accessibility to 5G services.
It is also important to invest more in technical and vocational education to improve workers’ digital skills, the Survey says, and to open telecommunications markets to foreign investors, in particular by accelerating the adoption and implementation of new legislation to reduce barriers to foreign entry and easing restrictions on foreign ownership.
The Survey, produced in conjunction with the Asian Development Bank, says reform priorities should also include easing administrative burdens on firms to improve competition and level the playing field between state-owned enterprises and private businesses. Viet Nam should also take bolder policy action to achieve net zero emissions, through stronger investment in renewables and energy efficiency.
See an Overview of the Survey with key findings and charts (this link can be included in media articles)
Note to Editors:
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The OECD engages with Viet Nam through country specific projects and the Southeast Asia Regional Programme (SEARP). This engagement takes various forms such as participation in OECD Bodies, country-specific policy reviews, integration of relevant data series in OECD databases, benchmarking exercises, and adherence to OECD instruments. This engagement has been formalised with a Memorandum of Understanding signed by Prime Minister Pham Minh Chinh and OECD Secretary-General Mathias Cormann in November 2021.
Over the years, Viet Nam and the OECD have cooperated on a number of country-specific reports and publications including the Multi-dimensional Review of Viet Nam in 2020 and the SME and Entrepreneurship Policy in Viet Nam in early 2021. The former provided inputs to the Socio-Economic Development Plan 2021-2025. In 2018, the OECD published an Investment Policy Review of Viet Nam, an Urban Policy Review of Viet Nam, and a Peer Review of Competition Law and Policy in Vietnam. The OECD also published a review of Agricultural Policies in Viet Nam in 2015 and Science, Technology and Innovation in Viet Nam in 2014.
Read more about OECD work with Viet Nam.
For further information, journalists are invited to contact Catherine Bremer in the OECD Media Office (+33 1 45 24 80 97).
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