Vietnam proved to be one of only a few economies to better the global average GDP growth in recent years, but its strategic economic pillars need strengthening to maintain development in the 2026-2030 period.

While many economies have posted negative growth in recent times and taken
years to regain their footing, Vietnam managed to maintain positive growth even
in its toughest period. Following the pandemic, Vietnam’s economy not only recovered
but quickly regained its high-growth pace, underscoring strong domestic fundamentals
and effective policy management. GDP in 2025 is projected to reach about $510 billion,
rising five places year-on-year to rank 32nd worldwide and fourth in ASEAN. Economists
believe the country stands out as one of the few to rebound faster than the global
average.

Towards a higher-growth future

While global growth in the 2022-2023 period stood at just 3.5 per cent, Vietnam
remained prominent as one of the economies with the most impressive recovery capacity
during this time. Experts believe the target of 8.3-8.5 per cent growth for 2025
is entirely achievable, especially as all three quarters of the year have recorded
positive results, with GDP growth of 6.93 per cent in the first quarter, 7.96 per
cent in the second, and 8.23 per cent in the third.

Mr. Nguyen Nhu Quynh, Director of the National Institute for Economics and
Finance at the Ministry of Finance, emphasized that the most important driver stems
from the government’s determination to build a solid foundation for recovery and
to promote growth across key pillars of the economy.

Industry continues to play a leading role, maintaining stable expansion with
9.5 per cent growth in the third quarter. The services sector has also accelerated
strongly, rising 8.56 per cent, with many service subsectors achieving double-digit
growth, reflecting a strong rebound in domestic demand and improving international
demand. Agriculture has sustained its role as the economy’s stabilizing force, with
3.74 per cent growth, continuing to support market stability and production.

Alongside sector-based drivers, macro-economic stability remains a crucial
foundation ensuring Vietnam’s sustainable recovery. Inflation has been maintained
at a reasonable 3.1-3.5 per cent, creating confidence among businesses and citizens
to continue production and commercial activities.

In addition, trade and FDI flows have continued to maintain stable growth despite
global economic volatility. These results further strengthen Vietnam’s position
in the eyes of foreign investors and within global supply chains.

These drivers are creating an important launch pad for Vietnam to move towards
higher growth targets in the new era. Nevertheless, the economy will still need
to unlock and develop additional new growth drivers to maintain its strong momentum.
“Over the past two years, Vietnam’s economy has relied heavily on consumption, public
spending, and public investment for recovery,” Mr. Quynh emphasized. “This raises
an urgent requirement for us to expand new growth drivers in the coming period to
ensure sustainable and long-term development.”

Headwinds for momentum

Despite achieving a range of positive results, Vietnam still faces a series
of challenges, both external and internal, that could create significant headwinds
for growth in the time to come.

On the international front, the global landscape is becoming more unpredictable
than ever as geopolitical conflicts and instability intensify, competition between
major powers grows increasingly fierce, and the rules-based order of globalization
and free trade faces potential disruption. In addition, new tax policies are exerting
strong impacts on the global economy, while growth in global trade and international
investment is forecast to decline in the years ahead.

Notably, the global boom in new technologies is accelerating rapidly, bringing
both opportunities and major pressures for Vietnam. According to Mr. Quynh, this
is a critical moment for Vietnam to seize the opportunity for innovation. Yet it
also represents a challenge, as the country’s capacity for technological innovation
and application remains limited. Without stronger acceleration in innovation and
high technology, Vietnam risks falling behind.

Vietnam’s economy continues to grapple with several structural weaknesses.
The growth model remains outdated and competitiveness is low, and these issues represent
not only short-term risks but also long-term challenges that could cause Vietnam
to lag behind and fall into the middle-income trap.

Additionally, Vietnam’s population is aging faster than anticipated, while
institutional bottlenecks, infrastructure constraints, and limitations in workforce
quality have yet to be fully resolved. “Though Vietnam has made major breakthroughs
in infrastructure development, labor quality has seen almost no significant improvement,”
he noted.

Mr. Jochen Schmittmann, Resident Representative of the International Monetary
Fund (IMF) in Vietnam, Laos, and Cambodia, observed that Vietnam’s Total Factor
Productivity (TFP), including institutional quality, national governance effectiveness,
corporate governance, and technological capability, remains significantly lower
than that of many emerging economies. This indicates that Vietnam is not yet making
optimal use of its resources, as capital, labor, and technology are not being allocated
to sectors that can generate the highest value, thereby limiting market efficiency.

At the same time, the current labor structure and credit allocation remain
misaligned, causing Vietnam’s private sector to lose many opportunities to break
through. The workforce lacks the skills required for new technological demands,
while private enterprises face significantly higher borrowing costs compared with
FDI enterprises and State-owned enterprises (SOEs). “Expensive capital makes it
difficult for them to scale up, invest in technology, or improve productivity, which
in turn undermines the long-term competitiveness of the entire economy,” Mr. Schmittmann
said.

New mindset for 2026-2030

Experts warn that meaningful breakthroughs will be hard to achieve without
a shift in approach. What Vietnam needs most, they argue, is a new development mindset,
one that reshapes leadership, the growth model, resource mobilization, and the nation’s
overall development space.

Vietnam has set an ambitious goal of moving towards double-digit annual growth
in the 2026-2030 period. This will be the pivotal stage for realizing the vision
of becoming a developing country with modern industry and upper-middle-income status
by 2030 and a developed, high-income country by 2045. These goals demand bold breakthroughs
in mindset and in the growth model.

According to Mr. Quynh, Vietnam will need major breakthroughs across all growth
drivers to achieve high growth during this “acceleration” phase. Several sectors
must post double-digit growth, with manufacturing and processing maintaining more
than 12 per cent to remain the economy’s anchor. Digital transformation, the digital
economy, and innovation-led industries offer key opportunities to close the technology
gap with leading economies. But success, he noted, ultimately hinges on political
will and effective policy execution.

A second strategic priority for 2026-2030 is restructuring the country’s economic
and social development space. This involves rezoning, expanding growth hubs, and
establishing North-South and East-West economic corridors to improve regional connectivity.
Stronger links between growth centers, seaports, and strategic transport routes
would help optimize capital, trade, and logistics flows.

At the same time, a selective FDI attraction strategy must be prioritized.
Vietnam should target high-technology projects with strong spillover potential and
adherence to ESG (environmental, social, and governance) standards. Such projects
must promote technology transfer, support innovation, enhance the capabilities of
domestic enterprises, and generate high added value, rather than concentrating on
labor-intensive or high energy-consumption industries.

Experts believe that prioritizing “next generation” FDI aligns with global
trends, as international corporations increasingly value sustainability and transparent
governance. This approach will not only help Vietnam maintain investment attractiveness
but also elevate its position within regional and global supply chains, moving towards
a greener, more modern, and more self-reliant economic model.

Many free trade agreements (FTAs) currently remain at the level of framework
commitments, without the deep liberalization of services, procedural reforms, or
significant reductions in non-tariff barriers. In the years to come, Vietnam will
need to leverage FTAs more effectively, enhance the standardization of certification
processes, and increase utilization rates so that domestic enterprises can fully
benefit from these agreements.

Finally, narrowing the gap between Vietnam’s domestic enterprises and FDI companies
in global supply chains is an urgent requirement. Currently, 73 per cent of Vietnam’s
export turnover belongs to the FDI sector, while domestic enterprises struggle to
access international buyers.

VET-Phuong Hoa