Remarkable Vietnam Growth Rate
Vietnam’s development over the past 30 years has been remarkable. Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth, transforming what was then one of the world’s poorest nations into a lower middle-income country. Between 2002 and 2018, GDP per capita increased by 2.7 times, reaching over US$2,700 in 2019, and more than 45 million people were lifted out of poverty. Poverty rates declined sharply from over 70 percent to below 6 percent (US$3.2/day PPP). The vast majority of Vietnam’s remaining poor – 86 percent –are ethnic minorities.
Given its deep integration with the global economy, the Vietnamese economy has been hit by the ongoing COVID-19 pandemic, but has shown remarkable resilience. GDP grew by 2.9 percent in 2020. It was one of the few countries in the world to do so, but the crisis also left a lasting impact on households, with with 45 percent of households reporting lower household income in January 2021 than in January 2020. Vietnam’s economy is set to grow 6.6 percent in 2021 on the back of successful control of COVID-19 infections, strong performance by export-oriented manufacturing and robust recovery in domestic demand.
Vietnam is experiencing rapid demographic and social change. Its population reached 96.5 million in 2019 (up from about 60 million in 1986) and is expected to expand to 120 million by 2050. According to the 2019 Population Census Report, 55.5 percent of the population is under 35 years of age, with a life expectancy of 76 years, the highest among countries in the region at similar income levels. But the population is rapidly aging. And Vietnam’s emerging middle class, currently accounting for 13 percent of the population, is expected to reach 26 percent by 2026.
Vietnam’s human capital index (HCI) stands at 0.69, meaning a child born in Vietnam today will be 69 percent as productive when she grows up as she could be if she enjoyed complete education and full health. This is higher than the average for East Asia and the Pacific region and lower middle income countries. Between 2010 and 2020, the HCI value for Vietnam increased from 0.66 to 0.69, but there are some disparities within the country, especially for ethnic minorities. There is also a need to upgrade the skills of the workforce to create productive jobs at a large scale in the future.
Health outcomes have improved in tandem with rising living standards. From 1993 to 2017, the infant mortality rate decreased from 32.6 to 16.7 (per 1,000 live births). Between 1990 and 2016, life expectancy increased from 70.5 to 76.3 years, and is the highest in the region for countries at a similar income level. Vietnam’s universal health coverage index is at 73—higher than regional and global averages—with 87 percent of the population covered. However, the high and widening sex ratio at birth (115 in 2018) shows that fundamental gender discrimination persists. At the same time, Vietnam is one of the most rapidly aging countries and the 65+ age group is expected to increase 2.5 times by 2050.
Over the past 30 years, the provision of basic services has improved significantly. Access of households to infrastructure services has increased dramatically. As of 2016, 99 percent of the population uses electricity as their main source of lighting, up from just 14 percent in 1993. Access to clean water in rural areas has also improved, up from 17 percent in 1993 to 70 percent in 2016, while that figure for urban areas is above 95 percent. However, in recent years, Vietnam’s physical capital investment as a percentage of GDP has been among the lowest in the ASEAN region. This will create challenges for continued growth of modern infrastructure services required for the next phase of growth.
Vietnam’s rapid growth and industrialization have had detrimental impacts on the environment and natural assets. Electricity consumption has tripled over the past decade, growing faster than output. Given the increasing reliance of fossil fuels, the power sector itself accounts for nearly two-thirds of the country’s greenhouse gas emissions. There is an urgent need to accelerate the clean energy transition. Over the past two decades, Vietnam has emerged as the fastest growing per-capita greenhouse gas emitters in the world – growing at about 5 percent annually. Demand for water continues to increase, while water productivity is low, about 12 percent of global benchmarks. Unsustainable exploitation of natural assets such as sand, fisheries, and timber could negatively affect prospects for long-term growth. Compounding the problem is the reality that much of Vietnam’s population and economy is highly vulnerable to climate impacts.
Urbanization and strong economic and population growth are causing rapidly increasing waste management and pollution challenges. Waste generation in Vietnam is expected to double in less than 15 years. Linked to this is the issue of marine plastics. Ninety percent of global marine plastic pollution is estimated to come from just 10 in-land rivers, and the Mekong river is one of them. Vietnam is among the 10 countries worldwide that are most affected by air pollution. Water pollution has significant costs on productivity of key sectors and human health.
The government is working to lower the environmental footprint of the country’s growth and effectively mitigate and adapt to climate change. Key strategies and plans to stimulate green growth and sustainable use of its natural assets are in place.
Source : World Bank, Apr 7, 2021