Vietnam’s economic scale sees spectacular growth over 8 decades

Nearly four decades into its reform journey, Vietnam has achieved remarkable success on multiple fronts, with milestones that many consider miraculous. One of the most striking achievements has been the significant narrowing of the income gap between Vietnam and many countries around the world.

Reform and results: A transformational journey

Since initiating its shift from a centrally planned, subsidy-based economy to a socialist-oriented market economy in 1986, Vietnam has overcome immense challenges. The Doi Moi (Renewal) reforms were launched at a time when the nation was economically exhausted from the war against US imperialism, struggles for border protection, and a prolonged harsh embargo.

One of the most severe challenges came in the first year of reform, with hyperinflation peaking at 774%. The government battled inflation for years, finally reducing it to single digits by 1993 and maintaining it around 5% through 2000. Since then, except for a few years of double-digit inflation, it has remained largely under control.

This success required a comprehensive strategy - liberalising market activities, implementing sound monetary policies, reforming the legal framework to support market mechanisms, and safeguarding economic freedoms. Although initial reforms led to improvements in agriculture, industry, and goods distribution, the country’s situation in 1990 was still dire.

Per capita income was under 100 USD, and 70% of the population lived in poverty, which dropped to 58 % by 1993. Among Doi Moi’s most significant accomplishments has been poverty reduction, with the rate falling from over 70% to under 1.9 % today, under the multidimensional poverty standard.

According to the International Monetary Fund (IMF), Vietnam’s economy is forecast to reach 491 billion USD in 2025, placing it 34th globally and 5th in Southeast Asia. This is built on a strong 2024 result, when GDP reached 476.3 billion USD, ranking fourth in ASEAN, above the Philippines at 462 billion USD and Malaysia 422 billion USD.

Looking further ahead, the IMF projects Vietnam’s GDP to reach 627 billion USD by 2029, surpassing Thailand at 616 billion USD to become the 32nd largest economy globally and 4th in the region. By 2030, the figure is expected to climb to 666.5 billion USD.

In August, the Government issued Resolution No. 226, setting ambitious growth targets for sectors and localities, aiming for national GDP growth of 8.3-8.5% in 2025 while keeping average consumer price index growth below 4.5%. Total investment is expected to increase by 11-12 %, with 2.8 quadrillion VND to be mobilised and disbursed in the second half of the year.

To achieve these goals, ministries and local authorities have been directed to prioritise investment, consumption, and exports, develop new growth engines, ensure effective governance, and prepare detailed economic scenarios for the remainder of the year.

In the early 2000s, some experts predicted Vietnam’s income levels would never catch up to regional peers. However, the opposite has occurred. From 2000 to 2024, Vietnam has significantly narrowed its income gap, measured by GDP per capita, with most countries in the region excluding China.

The IMF projects Vietnam’s GDP to reach 627 billion USD by 2029 (Photo: thanhnien.vn)

In 2000, Singapore’s per capita GDP was 55.8 times higher than Vietnam’s; by 2024, that figure had dropped to 19.7 times. The gap with Thailand shrank from 5.2 times to 1.6 times, while that with Malaysia narrowed from 9.6 times to 2.7 times. Indonesia, once 2.1 times higher, is now on par with Vietnam. The Philippines, once 2.8 times higher, has been overtaken. India, once surpassing Vietnam, now trails it, with Vietnam’s per capita GDP being 1.6 times higher.

These numbers are not just impressive, they serve as clear evidence of Doi Moi’s transformative impact and Vietnam’s extraordinary success in reducing poverty.

Staying the course: The socialist-oriented market economy

These advances affirm the success of Vietnam’s socialist-oriented market economy. Critics have called for abandoning the socialist element, but this perspective ignores its role in maintaining social welfare, political stability, and effective crisis management.

Vietnam has built a fully functional market economy while using socialist principles to guide inclusive development. More than 75 countries, including Japan, the Republic of Korea, and the UK, recognise Vietnam as a market economy. The US and the European Union have yet to do so, primarily due to political pressures.

Vietnam’s GDP per capita reached 4,717 USD in 2024, and GNI per capita was 4,490 USD, still short of the World Bank’s upper-middle-income threshold of 4,516 USD. It is expected to cross that mark in 2025. While GDP and GNI measure economic performance, they don’t fully reflect real living standards. On a purchasing power parity basis, one US dollar in Vietnam has the buying power of 3.33 USD in the US, suggesting Vietnam would already qualify as high income by that measure.

Vietnam’s sizable informal economy also distorts official statistics. Legal but unrecorded sectors such as betting and crypto remain outside GDP calculations. With 17 million cryptocurrency holders, Vietnam ranks among the world’s top seven nations in crypto adoption. Including these sectors would significantly raise per capita income and further reduce the perceived income gap.

From independence in 1945, national reunification in 1975, to Doi Moi 1986, Vietnam’s journey has been extraordinary. Today, it stands as a regional leader with a long-term vision: to become a high-income, developed nation by 2045.