Over the past few years, Vietnam has become a rising star in Southeast Asia. The country has undergone a dramatic economic transformation and has become one of the fastest-growing countries in the world. The favorable economic climate has also fostered the emergence of the digital economy and an expanding startup ecosystem. The recent wave of the pandemic has also solidified digital trends that accelerated Vietnam’s path to the next digital economic powerhouse in Southeast Asia.
Even though its history spans thousands of years, Vietnam has only started to open its economy since 1986, the year when the Doi Moi reforms were announced, and has evolved quickly ever since. According to the World Bank, Vietnam now has over 745 listed companies on the stock exchange which accounted for 68.6% of its Gross Domestic Product (GDP) in 2020. This is a massive leap from merely 24 listed companies in 2004. Below is a snapshot of milestones and significant events that have shaped the Vietnamese economy for the past 35 years.
Current Stable Macro Environment
After 35 years, the Vietnam economy has been thriving and attracting many foreign investors. It has been one of the five fastest-growing countries in the world over the past 30 years, beating its neighbors. From 2009 to 2019, Vietnam’s GDP grew by an average of 7% per annum. In 2020, Vietnam was one of a few countries globally that recorded a GDP growth of 2.9%. Vietnam’s GDP per capita grew to US$2,800 from a mere US$422 in 1986.
Looking further into Vietnam’s GDP growth drivers, Vietnam has been shifting away from agriculture and towards industry and services which currently account for approximately 75% of the country’s GDP. As the rest of East Asia developed that prompted wages to rise, global manufacturers were lured by Vietnam’s low labor costs and stable exchange rate. In addition to that, inflation has always kept below 4% which is the government’s target.
Altogether these factors fuelled an export boom. In the past decade, exports by domestic firms have risen by 137%, while those by foreign-owned companies have surged by 422%.
Another contributor to Vietnam’s economic growth is the golden population structure. Vietnam’s population is approximately 97 million with the working-age population (15-60 years old) accounting for 68.5%. This indicates that for every two or more people working, there is only one dependent.