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Vietnam is one of the fastest–growing economies in the world. The country’s 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 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%. In 2022, Vietnam registered a growth of 8.02%, the highest pace since 1997.
For 2023 and 2024, the International Monetary Fund (IMF) expects Vietnam’s economy to grow by 4.7% and 5.8% respectively.
Vietnam GDP Annual Growth Rate (in %)
As per IMF, the country’s population is around 100 million. Unemployment is low with 1.92% in 2022, and a forecast of 2.09% by the end of 2023.
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.
After 1.84% in 2021, inflation in Vietnam rose in recent years. The IMF expects it to be around 3.4% in 2023 and 2024.
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 represented 41.3% of the country’s GDP in 2022. The government’s pandemic measures last year impacted its dominant services tourism and telecommunications.
The industrial sector, which encompasses construction, contributed 38.26% to Vietnam’s GDP. Within various industries, the manufacturing sector had an employment of around 11.8 million individuals, marking it as the second-largest employer in 2022.
The country’s coal, hydrocarbons, electricity, cement, and steel industries have recently 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 agricultural sector in the country makes up 11.99% of the GDP. With a workforce of almost 14 million individuals, the agriculture, forestry, and fishing sector in Vietnam holds the position of the largest employer 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 21st globally in terms of total exports, with phones and accessories, computers and electronic products, machinery and equipment, textiles and garments, and footwear as its main export products. The US, China, Japan, South Korea, and the Netherlands are the country’s top export partners.
Meanwhile, the country is 19th in total imports worldwide and its top import products are electronic products and components, telephones, refined petroleum, fabrics of all kinds, and iron and steel. Vietnam’s main import partners are China, South Korea, Japan, the US and the Netherlands.
Vietnam economy: Balance of Trade
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 HoSE 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. HoSE will undertake all stock tradings.
HNX will stop listing new stocks from July 1, 2025, and switch all existing listed companies to HoSE by December 31 of 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.
During the quarter ended in September 2023, Vietnam’s domestic currency bond market witnessed a 3.9% quarter-on-quarter growth. However, the growth of outstanding Treasury and other government bonds was slower at 1.5% quarter-on-quarter in the same period, attributed to a decrease in issuance. Besides, local currency corporate bonds contracted 3.1% quarter-on-quarter between July and September of 2023.
Fitch Ratings has elevated Vietnam’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB+’ from ‘BB’.
Real Estate Market
Vietnam’s real estate sector, once thriving, faced setbacks amid the challenges imposed by the Covid-19 pandemic.
The year 2023 proved to be a testing period for the country’s property market, witnessing the dissolution of over 550 real estate companies in the first five months alone.
Despite the initial hurdles, signs of recovery emerged in the subsequent months. The Savills Q3/2023 Market Brief supports this optimism, particularly in the commercial real estate segment.
According to the brief, Vietnam’s office market exhibited higher occupancy rates and lower occupancy costs compared to many regional counterparts. Despite challenges in the country’s residential and housing markets of Hanoi and Ho Chi Minh City, apartment prices in 2023 have seen a remarkable 77% increase over the past four years, as per Savills Vietnam.
“When compared to the same period last year, real estate business credit climbed by 22% in the first nine months of 2023. This suggests that many organisations are progressively acquiring access to greater money in order to solve short-term cash flow issues,” says Tran Minh Tien, Director of the Market Research and Customer Understanding Center at One Mount Real Estate Research Centre.
Looking ahead, One Mount anticipates a growth in primary supply, providing homeowners with more alternatives in 2024.
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
