Vietnam has become one of the fastest growing economies of East Asia. Will it emerge as a major force in the region?
It is expected that very soon, Vietnam could become one of the world’s fastest-growing economies. Vietnam's economic activity has been increasing at a 3% growth rate annually. The trade surplus is a key indicator and is said to be behind the country's economic rise. From January to August 2020, Vietnam’s trade surplus touched $11.9 billion. However, imports declined when business operations were hampered due to the Covid lockdown. According to the General Statistics Office (GSO), imports fell by 2.2% to $162.2 billion year-on-year while exports rose by 1.6% to $174.1 billion. It was reported that the exports of a few items exceeded $10 billion. These items included smartphones, computers, textiles, machinery, and footwear. The USA was Vietnam’s largest market. It supplied nearly $46.7 billion worth of exports. China and the European Union were in the second and third places.
In the years following the Second World War, several Asian miracles emerged that built themselves by focusing on their growth rate, trade surplus and indigenous production of goods. These included Japan, Taiwan, South Korea and China. Vietnam is now aspiring to become a part of this elite group. Vietnam’s exports, in this regard, will play a pivotal role. It is scheduled to propose a five-year economic plan targeting growth of 6.5% to 7% for 2021-25. It aims to boost per-capita GDP to $4,700 from this year’s estimate of $2,750.
The plan will be finalized when the Communist Party of Vietnam holds a convention in January 2021. The party members will approve a new leadership and an economic growth strategy for the next five years.
The Ministry of Planning and Investment proposed average gross domestic product growth of 6.5% to 7% for the next five years when it held a session on September 29. The session also cited a target of per capita GDP of $4,700 to $5,000 by 2025. The proposal was brought to the table after Vietnam was unable to reach the targets as proposed in the 2016-20 plan.
“The average growth rate of the five years from 2016 to 2020 is estimated at about 5.8%,” falling short of the 6.5%-7% target, according to Dautu, a state media source working under the planning ministry.
Vietnam’s GDP is estimated at $269 billion this year, up roughly 40% from $193 billion five years ago. Per-capita GDP is estimated at $2,750, growing 30% over five years from $2,109.