Vietnam is forecast to become the second-largest economy in Southeast Asia after Indonesia and the 20th-largest economy in the world by 2036, according to the World Economic League Table 2022 report by the Center for Economic and Business Research (CEBR).
The report pointed out that, as of 2021, Vietnam is estimated to have a purchasing power parity adjusted GDP per capita of $11,608.
Vietnam’s economic growth story has been nothing short of a miracle, with the doi moi reform in the mid-1980’s, coupled with favourable global trends, enabling the nation to achieve rapid economic growth and propelling the country from a poor country to a lower-middle-class country.
The economy employs five-year plans for its economic outlook, with the current plan running from 2021 to 2025, emphasising the continuation of the current economic development model. Growth is to be facilitated via manufacturing, supported by further integration into global supply chains, and through the pursuit of trade partnerships and export diversification.
Underpinning the robust GDP growth in 2021 has been a resilient labour market. In 2021, the unemployment rate fell by 0.6 percentage points to 2.7 per cent.
Government debt as a share of GDP reached 47.9 per cent in 2021, compared to 46.3 per cent the previous year. This increase is attributable to the impact of the pandemic on government spending and tax receipts.
Vietnam aspires to attain a high-income status by 2045. For this to happen, it must grow at an annual average rate of approximately 5 per cent per capita. Vietnam’s ongoing five-year plan currently estimates growth to average 6.5 per cent annually for the coming decade, keeping it on track with its aspirations.
Nonetheless, it faces key challenges on its path to becoming a high-income country. With global trade declining and its population ageing, it needs to improve its policy implementation performance drastically, particularly in sectors that will be severely affected by automation and climate change.
Between 2021 and 2036, CEBR forecasts that the position of Vietnam in the World Economic League Table will improve considerably, with its ranking rising from 41st to 20th by 2036.
At that time, Vietnam will rank second in Southeast Asia, only after Indonesia. Meanwhile, Thailand will be ranked third in Southeast Asia and 22nd in the world.
According to the IMF, by 2025, Vietnam will rise to the third position in Southeast Asia in terms of economic size with a GDP of $571.12 billion, trailing behind Indonesia ($1.63 trillion) and Thailand ($632.45 billion) while surpassing Malaysia ($556 billion), the Philippines ($523.53 billion), and Singapore ($496.81 billion).
By 2027, the GDP of Thailand and Vietnam will be on par at more than $690 (Thailand $692.6 billion and Vietnam $690.11 billion). After 2028, it is forecasted that Vietnam’s economy will officially surpass Thailand’s.
If CEBR’s forecast is correct, by 2036, Vietnam’s economy will surpass Poland, Switzerland, Sweden, Belgium, and Australia.