Vietnam is a densely-populated developing country that in the last 30 years has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally-planned economy.
Economic stagnation marked the period after reunification from 1975 to 1985. In 1986, the Sixth Party Congress approved a broad economic reform package that introduced market reforms and set the groundwork for Vietnam’s improved investment climate. Substantial progress was achieved from 1986 to 1997 in moving forward from an extremely low level of development and significantly reducing poverty.
The 1997 Asian financial crisis highlighted the problems in the Vietnamese economy and temporarily allowed opponents of reform to slow progress toward a market-oriented economy. GDP growth averaged 6.8% per year from 1997 to 2004 even against the background of the Asian financial crisis and a global recession.
Since 2001, Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive, export-driven industries. The economy grew 8.5% in 2007. Vietnam’s membership in the ASEAN Free Trade Area (AFTA) and entry into force of the US-Vietnam Bilateral Trade Agreement in December 2001 have led to even more rapid changes in Vietnam’s trade and economic regime. Vietnam’s exports to the US increased 900% from 2001 to 2007.
Vietnam joined the WTO in January 2007, following over a decade long negotiation process. WTO membership has provided Vietnam an anchor to the global market and reinforced the domestic economic reform process. Among other benefits, accession allows Vietnam to take advantage of the phase-out of the Agreement on Textiles and Clothing, which eliminated quotas on textiles and clothing for WTO partners on 1 January 2005. Agriculture’s share of economic output has continued to shrink, from about 25% in 2000 to less than 20% in 2007.
Deep poverty, defined as a percent of the population living under $1 per day, has declined significantly and is now smaller than that of China, India, and the Philippines. Vietnam is working to create jobs to meet the challenge of a labor force that is growing by more than one-and-a-half million people every year. In an effort to stem high inflation which took off in 2007, early in 2008 Vietnamese authorities began to raise benchmark interest rates and reserve requirements. Hanoi is targeting an economic growth rate of 7.5-8% during the next four years.
|GDP:||$221.1 billion (2007 est.)|
|GDP growth rate:||8.5%|
|GDP per capita:||$2,600|
|GDP composition by sector:||agriculture: 20.9%
|Labor force:||44.39 million|
|Labor force – by occupation:||agriculture: 56.8%
|Budget:||revenues: $11.64 billion
expenditures: $12.95 billion
|Electricity production by source:||fossil fuel: 43.7%
|Industries:||food processing, garments, shoes, machine-building, mining, cement, chemical fertilizer, glass, tires, oil, coal, steel, paper|
|Agriculture:||paddy rice, corn, potatoes, rubber, soybeans, coffee, tea, bananas, sugar; poultry, pigs, fish|
|Exports:||crude oil, marine products, rice, coffee, rubber, tea, garments, shoes|
|Export partners:||US 21.3%, Japan 13.4%, Australia 8.1%, China 7.5%, Singapore 5.4%, Germany 5.1%|
|Imports:||machinery and equipment, petroleum products, fertilizer, steel products, raw cotton, grain, cement, motorcycles|
|Import partners:||China 15.5%, Singapore 12.2%, Taiwan 11.3%, South Korea 10.7%, Japan 9.9%, Thailand 6.5%|
SOURCES: The CIA World Factbook, U.S. Department of State, Area Handbook of the US Library of Congress