Vietnam's GDP to grow 6.5-6.6% despite downside risks: OECD

Despite an increase, inflation remains well below levels in many OECD countries, at 4.3 per cent over the year to February 2023 for headline consumer price inflation, against 8.8 per cent on average in OECD countries, according to the OECD’s first Economic Survey of Vietnam, produced in conjunction with the Asian Development Bank.

Vietnam has seen a dramatic reduction in poverty over the past three decades, bringing down its poverty rate from 80 per cent in 1992 to 7 per cent just before the COVID-19 crisis. Per capita GDP relative to the OECD average more than doubled over the past two decades, approaching 25 per cent. Nevertheless, for the years ahead, a rapidly ageing population will start to weigh on economic growth and public finances, particularly as Vietnam will need to expand its low public pension coverage. To continue lifting living standards it will be necessary to raise tax revenues to fund growing spending needs, including greater social protection coverage, while boosting labour productivity and business dynamism and reducing labour market informality.

The digital transition is also crucial for Vietnam’s future prosperity. Digital innovations can be transformative for emerging markets as they can be applied and diffused more quickly than advances in more traditional sectors. Vietnam’s government aims to expand the digital economy to account for 30 per cent of GDP by 2030, compared to approximately 7 per cent of GDP at present, by improving quality infrastructure, e-government, and accessibility to 5G services.

The survey said that reform priorities should also include easing administrative burdens on firms to improve competition and level the playing field between state-owned enterprises and private businesses. Vietnam should also take bolder policy action to achieve net zero emissions, through stronger investment in renewables and energy efficiency.

“Vietnam’s strong economic growth has led to remarkable social progress over recent years, and its economy has been resilient to shocks. Further reforms to improve the business climate, spur competition, and expand the pension and welfare system are necessary for Vietnam to continue on its path of economic and social progress and to fully benefit from its deep integration in global trade,” said acting deputy director of the OECD’s Economic Country Studies Branch Vincent Koen, presenting the Survey in Ha Noi.

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