Vietnam is one of the fastestgrowing economies in the world. The countries economic boom is attributed to the shift in labour allocation from agriculture to the manufacturing and services sector. Vietnam also received a boost from private investment, strong tourism, higher wages, and increased urbanisation. The rapid expansion of industries, such as textile, electronics, and seafood production, propelled export numbers to new heights.  

Vietnam recorded 10-year high GDP growth of 7.1% in 2018 and by 7.02% in 2019. Despite the Covid-19 outbreak in 2020, the country was one of the few economies that recorded positive growth with 2.91%.Its aggressive public health measures were able to minimise the impact of Covid-19 on Vietnam’s economy. In 2021, the Southeast Asian country’s GDP grew by 2.58%.

The Vietnam economy is expected to recover fast and record GDP growth 6.6% in 2022, according to the International Monetary Fund (IMF). The government is targeting GDP growth of 6.0%-6.5% in 2022.


Vietnam
GDP Annual Growth Rate (in %)

However, the normalisation of its economic activities still depends on the post-pandemic global economic recovery. GDP per capita remained around $3,000 and is expected to increase to $4,000 by 2022.  

As per IMF, the country’s population is at around 94 million, making Vietnam the 15th most populous nation in the world, despite the government’s two-child policy. While Hanoi is Vietnam’s capital, Ho Chi Minh City (formerly Saigon) is the country’s most populated city with over 3.4 million.   

Unemployment is very low despite a slight uptick in 2021 to 3.22% from 2.6% in 2020.


Vietnam
Unemployment Rate (in %)

Currency and Central Bank 

The Vietnamese dong has been the country’s official currency since 1978. The dong was formerly subdivided into 10 hao. These coins have not been used since 2014 in retail, although, some banks may still accept them.  

The State Bank of Vietnam serves as the country’s central bank and owns approximately 65% of Vietnam’s largest listed bank by capital, VietinBank. The central bank is responsible for the promotion of monetary stability, the formulation of monetary policies, and the supervision of financial institutions.  

Inflation came in at 1.84% in 2021 after increasing to 3.23% in 2020 – from 2.79% in 2019.


Vietnam
Inflation (in %)

Industry and Trade  

The agriculture, industry, and services sectors are the pillars of Vietnam’s economy. It is dominated by large state-owned companies, including textiles, plastics, food, furniture, paper, tourism, and telecommunications.  

Vietnam’s services sector represents 41.63% of the country’s GDP and employs 35% of the total workforce. The government’s pandemic measures last year impacted its dominant services tourism and telecommunications. 

Industry makes up 33.7% of Vietnam’s GDP. The sector employs around 11.3 million people, making it the second-largest employment sector in the country. Recently, the country’s coal, hydrocarbons, electricity, cement, and steel industries have boomed while oil production became the third-largest in Southeast Asia. Automobiles, electronics, and computer technologies are the high–value-added industries attracting major investments.  

The country’s agriculture sector contributes to 14.85% of the GDP. With almost 17.73 million people, agriculture, forestry, and fisheries employ the most people among all industries. Rice, coffee, cashew nuts, corn, pepper, sweet potatoes, peanuts, cotton, rubber, and tea are among the country’s top agricultural products.  

Vietnam ranks 20th globally in terms of total exports, with broadcasting equipment, telephones, integrated circuits, textile footwear, and leather footwear as its main export products. The US, China, Japan,  South Korea, and Germany are the country’s top export partners. 

Meanwhile, the country is 20th in total imports worldwide and its top import products are integrated circuits, telephones, refined petroleum, light rubberized knitted fabric, and semiconductor devices. Its main import partners are China, South Korea, Japan, Thailand, and Taiwan. 


Vietnam economy:
Balance of Trade

Survey and Rankings 

Vietnam improved its overall score from 68.6 in 2019 to 69.8 in 2020 in the World Bank’s 2020 Ease of Doing Business Ranking. However, the country slid down by one spot from 69th to 70th out of 190 countries.

Meanwhile, Vietnam took a big leap from 90th freest in 2021 to 84th in 2022 in the Heritage Foundation’s Index of Economic Freedom. With an overall score of 60.6 Vietnam belongs to the “Moderately Free” category. 

Stock Exchanges and Capital Markets 

The Ho Chi Minh City Stock Exchange (HOSE or HSX) and the Hanoi Stock Exchange (HNX) are the two major stock exchanges in Vietnam. The Vietnam Stock Index or Vn Index serves as the benchmark of HSX and is based on the total capitalisation of all listed companies in the exchange. 

In 2020, the government decided to set up the Vietnam Stock Exchange to manage HSX and HNX. While both exchanges will share certain functions, HNX will be responsible for operating the derivatives market, the bond market and the market for other securities. HSX will undertake all stock tradings. 

HNX will stop listing new stocks from July 1, 2023 and switch all existing listed companies to HSX by December 31 the same year.

Bond Market 

Vietnam’s bond market has seen steady progress over the past years due to continuous initiatives by the government. While government bonds still dominate the market, municipal bonds, corporate bonds, and convertible bonds are now available. 

According to the Asian Development Bank’s (ADB)’s November edition of its Asia Bond Monitor, the Vietnam’s government bond market increased 4.2% quarterly in Q3 2021, after a contraction of 0.5% in the previous quarter. Meanwhile, the local currency bond market rose at a pace of 8.1% in Q3 2021, compared to the previous quarter’s increase of 6.1%.

Government bonds comprised 74.4% of Vietnam’s bond market while the remaining 25.6% are corporate bonds, as of September 2021. The corporate bond market maintained its expansion at 21.5% in Q3 2021.

Real Estate Market

Vietnam’s real estate market has flourished over the years. The continued economic growth has led to a surge in property prices, while increasing urbanization has created demand for housing in large urban centers. Also the lack of investment options and high demand for apartments led to a housing market boom.

While demand and supply are exceptionally low due to the Covid pandemic, residential property prices still continue to rise. According to Savills, primary housing stock fell by 70% year-on-year in Ho Chi Minh City and 27% in Hanoi in Q3 2021. Apartment prices in Ho Chi Minh City rose by 10.9% from a year earlier, while average price of apartments in the capital Hanoi rose by 9.3%.

Vietnam opened its property markets to foreigners in 2015. Foreigners with a tourist visa can purchase property in Vietnam. However, they are only allowed to own a maximum of 30% of condominium units and no more than 10% of properties in a landed project.

 

Source of charts: tradingeconomics.com