Economic trends
After adopting a major reform plan (Doi Moi) in 1986, Vietnam experienced a period of strong growth. From 2004 to 2007, the annual GDP growth surpassed 8%, then, it slowed down to 3.5% in 2008. Vietnamese growth is sustained by international trade and foreign investments, with exports ensuring more than two-thirds of the GDP. The impact of the financial crisis on Vietnam was limited with a GDP growth of more than 6% in 2010.
The government launched reforms for all the key sectors of the economy and anticipates partial privatization of public companies; however, their implementation remains gradual. A tax reform has also been undertaken in order to compensate for the fall in customs revenues, as a consequence of its entry into the WTO and to make the country more attractive to investors. In order to deal with the global financial crisis, the government has established several recovery plans aimed at improving the business climate and therefore promoting production and exports, stimulating consumption and investments, increasing social security and reducing poverty, introducing monetary policies and effective taxation.
The reforms have succeeded in the improvement of the standard of living of the inhabitants. The GDP per capita went from USD 220 in 1994 to more than USD 1,000 today. The percentage of the population living on less than a dollar per day has declined in a significant way and it is now lower than China, India or the Philippines. However, the urban unemployment rate has risen in recent years and under-employment, estimated at 30% remains constant.
Main branches of industry
The declining agricultural sector is dominated by cultivation and plantations (rice, coffee, cashew nuts, corn, pepper, sweet potatoes, peanuts, cotton, rubber and tea), and aquaculture. However, it is the sector that employs the biggest part of the population.
Industry is the main driver of growth in the Vietnamese economy. The sector is still dominated by large public groups. The country's main industries are textile, food industry, furniture industry, plastics and paper industries. The energy sector is in full-growth since several years ago (coal, hydrocarbons, electricity, cement, steel and naval industry). Even though it is the "new comer" in the oil industry, today Vietnam is the third biggest Southeast Asian producer. The country has also invested into high value-added industries such as cars, electronic and computer technologies (software).
The services sector is sustained by tourism and telecommunications. These profitable sectors should strongly contribute to the economic health of the country in the next following years.
International trade
Vietnam is one of the Asian economies most open to international trade, which represents more than 100% of the GDP, more than twice the Chinese rate and more than 4 times the Indian rate. Vietnam has demonstrated its strong commitment to trade liberalization in these recent years. It has joined the WTO and signed Free Trade Agreements (FTAs) with ASEAN countries and the USA. Vietnam also has a cooperation agreement with the EU.
Vietnamese trade is characterized by a strong geographic inequality, the country shows a trade surplus with western countries and a growing deficit with its Asian neighbors. Vietnam is currently classified as the third largest rice exporter in the world. The other exports mainly constitute textiles, clothing and footwear products and crude oil, whereas imports are mainly made up of tool machinery, refined oil and steel.
The main export customers of Vietnam are the USA, Japan, the EU, Australia and China. For imports, the country's main partners are China, Singapore, Japan, South Korea and Thailand.
The global economic crisis affected Vietnam's foreign trade. Exports dropped by 14% in relation to 2009, and imports by 28%, the trade deficit rose to USD 500 million.
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Last updates: January 2012
