For several decades, Vietnam's GDP has demonstrated outstripping growth rates, which allowed the country to significantly increase its socio-economic indicators. In particular, the standard of living of the population has been raised, the average life expectancy has exceeded 75 years, access to education has been expanded.
Infrastructure is also actively developing in the country, as evidenced by the achievement of an electrification rate of almost 100% compared to 14% in 1993, as well as the expansion of access to clean drinking water in rural areas.
Before the start of the COVID-19 pandemic, the country's GDP showed growth rates exceeding 7% for two years in a row. These achievements indicate the rapid transformation of Vietnam and the transformation of the country into an attractive destination for attracting foreign investment.
Vietnam became one of the few countries to show growth in 2020. Despite the fact that the Vietnamese economy managed to avoid a recession amid the COVID-19 pandemic, the growth rate significantly decreased to 2.9% in 2020 and 2.6% in 2021. Vietnam showed high recovery rates only in 2022, when real GDP growth was 8.0%, which is a record since 1997. This became possible due to the effect of deferred demand caused by a rapid increase in domestic consumption after the removal of covid restrictions, as well as sustainable export-oriented production. Nevertheless, by the end of the year, the growth rates in the secondary and tertiary sectors began to slow down.
According to the IMF forecast, Vietnam's economic growth will slow down to 5.8% in 2023. Domestic demand will remain the main source of growth, but an increase in inflationary pressure may lead to a reduction in consumption and a further decline in economic indicators in the main sectors. The openness of the Vietnamese economy makes the country extremely vulnerable to external factors.
It is foreign trade risks that are the main reason for Oxford Economics' more conservative forecast for 2023 of 3.9%. The medium-term forecast will also largely depend on the situation on the world market. According to the IMF, the growth rate of Vietnam's economy in 2024-2028 will be at the level of 6.7–6.9%, while Oxford Economics expects lower figures of 4.4% in 2024, followed by growth of 7.6% in 2025 and a slowdown to similar levels to the IMF in 2026.
Vietnam's GDP by PPP per capita in 2022 amounted to 13.3 thousand US dollars, and by 2028, according to IMF forecasts, it will reach 21.2 thousand US dollars, demonstrating an average annual growth rate of 8.0% for 2023-2028.
According to the IMF, inflationary pressure increased in 2022, the inflation rate was 3.2% against the background of rising world prices for raw materials, primarily for hydrocarbons. As a result, the Central Bank of Vietnam tightened its monetary policy. To date, the forecast for the inflation rate largely depends on the price situation in the commodity market. Weak indicators of economic development in early 2023 forced the Central Bank to lower the interest rate, but this step may lead to another round of inflation. According to the IMF, in 2023 It will rise to 5.0% amid expectations of further easing of monetary policy in order to stimulate GDP growth. In the medium term, inflation is expected to fall to 4.0%.
