Assignment 2: GDP Growth Analysis in Vietnam
Objective: Evaluate the GDP growth rate in Vietnam, its implications for the economy, and
related policy responses.
Instructions:
Collect data on Vietnam's GDP growth rate from credible sources such as the World Bank, IMF,
or the General Statistics Office of Vietnam.
Create a chart displaying the GDP growth rate over the last five years (2019-2024).
Write an analysis that includes:
Discussion of the main drivers of GDP growth in Vietnam (e.g., manufacturing, services, foreign
direct investment).
Examination of the economic implications of GDP growth for employment, income levels, and
living standards in Vietnam.
Analysis of policy responses to GDP trends, such as fiscal policies, investment incentives, and
trade agreements, and their impact on sustaining growth.
Identification of any challenges that may impact future GDP growth (e.g., global economic
conditions, domestic policies).
Deliverable: A 4-5 page report (following APA 7th citation).
Deadline: 12/12/2024.
1. Introduction - lacey
GDP (Gross Domestic Product) is the market value of all final goods and services produced
within a country in a given period of time.
GDP Growth Rate is also known as the Economic Growth Rate, and it measures the change in
the GDP of the country in comparison to an earlier period. The amount of change is measured in
percentage (%), which serves as a determinant of economic health in the country and the possible
growth in the future. (Clear Tax, 2023)
The importance of GDP growth extends beyond numbers; these figures serve as a foundation for
poverty reduction, infrastructure development, and social stability. Understanding and sustaining
Vietnam’s GDP growth is important to ensuring long-term economic prosperity and achieving
the country’s developmental goals.
Objective: Analyze trends, implications, and policies related to GDP growth (2019-2024).
2. Data and Trends - lacey, bùi
● Sources: World Bank, IMF, General Statistics Office of Vietnam.
The gross domestic products (GDP) in 2019 witnessed an impressive result with a growth rate of
7.02%, exceeding the National Assembly’s target of 6.6% – 6.8% (GDP increase rate was 6.82%
in the first quarter, 6.73% in the second quarter, 7.48% in the third quarter, and 6.97% in the
fourth quarter). This is the second consecutive year that Vietnam’s economic growth has reached
over 7% since 2011. (General Statistics Office, 2019)
2020 is considered as a year of difficulties and challenges for the world economy in general,
including Viet Nam. However, Viet Nam’s economy still maintained growth with GDP growth
estimated to increase by 2.91%. Although GDP growth in 2020 reached the lowest rate in the
period 2011-2020, but in the context of the Covid-19 pandemic, this was a success for our
country in the group of highest growth rates in the world. (General Statistics Office, 2020)
(GSO, 2020)
GDP in 2021 was estimated to increase by 2.58% (the first quarter increased by 4.72%; the
second quarter by 6.73%; the third quarter by 6.02%; the fourth quarter by 5.22%) over the
previous year due to the Covid-19 seriously affected all areas of the economy. (General Statistic
Office, 2021)
GDP in 2022 was estimated to increase by 8,02% compared to the previous year, achieving the
highest increase in the period 2011-2022 due to the economic recovery. Of the increase in the
total added value of the whole economy, the agriculture, forestry, and fishery sector increased by
3.36%, contributing 5.11%; the industry and construction sector increased by 7.78%,
contributing 38.24%; the service sector increased by 9.99%, contributing 56.65%. (General
Statistic Office, 2022)
GDP in 2023 was estimated to increase by 5.05% compared to the previous year, only higher
than the growth rate of 2020 and 2021 in the period 2011-2023. In the increase in total added
value of the entire economy, the agriculture, forestry and fishery sector increased by 3.83%,
contributing 8.84%; the industry and construction sector increased by 3.74%, contributing
28.87%; the service sector increased by 6.82%, contributing 62.29%. (General Statistic Office,
2023)
Gross domestic product (GDP) in the first quarter of 2024 was estimated to increase by 5.66%
over the same period in 2023. Gross domestic product (GDP) in the second quarter of 2024 grew
positively, the growth rate was estimated 6.93% over the same period last year, only lower than
the growth rate of 7.99% in the second quarter of 2022 in period 2020-2024. Gross domestic
product (GDP) in the third quarter of 2024 was estimated to increase by 7.40% over the same
period last year.
● Chart showing GDP growth rates over the last five years (2019-2024).
3. Drivers and Implications of GDP Growth - bùi
Key Drivers of GDP Growth in Vietnam
The manufacturing sector has been a cornerstone of Vietnam's economic success, contributing
significantly to GDP growth. Electronics, textiles, and footwear are among the leading industries,
with electronics giants like Samsung and LG investing heavily in the country. In 2019, Vietnam's
exports expanded by about 8 percent, nearly four times faster than the world average, reflecting
the strong performance of its external sector (World Bank, 2019). Vietnam's export performance
has been robust, supported by its integration into global supply chains and trade agreements such
as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and
Regional Comprehensive Economic Partnership (RCEP) (IMF, 2024). Despite global demand
challenges in recent years, exports grew by 15.68% year-on-year in Q3 2024.
On Foreign Direct Investment (FDI), Vietnam remains an attractive destination for FDI due to its
low labor costs, strategic location, and favorable trade policies. In 2024, FDI inflows reached
$20.2 billion in the first nine months, marking a 7.7% increase compared to 2023. The
manufacturing and processing industries accounted for over 60% of total FDI (IMF, 2024).
High-tech sectors such as renewable energy and green technologies are emerging as new areas of
investment.
With the services sector like tourism, its recovery post-COVID-19 has boosted the services
sector significantly. Increased domestic consumption and growing international arrivals have
contributed to GDP growth in 2023 and 2024 (World Bank, 2023).
Finally, on government policies, the expansionary fiscal and monetary policies have supported
economic recovery during challenging periods, such as the COVID-19 pandemic and global
economic slowdowns. Public investment in infrastructure has also played a critical role in
sustaining growth (World Bank, 2023).
Implications of GDP Growth
Vietnam's consistent GDP growth has had profound implications for its economy and society
With employment, the expansion of key sectors like manufacturing and services has created
millions of jobs, reducing unemployment rates significantly. FDI-driven industries have also
contributed to skill development through technology transfer.
Rising GDP per capita reflects improvements in income levels. Between 1986 and 2023, real
GDP per capita increased from less than $700 to nearly $4,500 (in constant 2023 USD), lifting
millions out of poverty.
Lastly, higher income levels have translated into better living standards for Vietnamese citizens.
Access to essential services like electricity and clean water has improved dramatically over the
past decades, with rural areas benefiting greatly from development efforts. Poverty rates have
declined sharply, with less than 4% of the population living below $3.65/day in 2023 (2017 PPP)
(World Bank, 2024).
4. Policy Responses - thùy
Vietnam’s impressive economic growth over the past years is partly attributed to proactive policy
measures encompassing fiscal policies, investment incentives, and trade agreements (Vietnam
Briefing, 2024). The government’s fiscal policies have played a critical role in stabilizing and
boosting the economy, especially during challenging periods such as the COVID-19 pandemic.
Investments in large-scale infrastructure projects, including transportation and urban
development, have been instrumental in driving economic activities and generating employment
opportunities. Additionally, targeted tax reductions and deferrals were implemented to help
businesses maintain liquidity and ensure operational continuity during economic disruptions.
Investment incentives have been another cornerstone of Vietnam’s growth strategy. The
government has introduced a variety of measures, such as tax holidays, reduced corporate
income tax rates, and favorable land-use policies, to attract foreign direct investment (FDI).
Special Economic Zones (SEZs) and Industrial Parks, notably in regions like Bac Ninh and Binh
Duong, have successfully drawn global investors, particularly in manufacturing and electronics.
These incentives have strengthened Vietnam’s position as a competitive hub for industrial
production in Southeast Asia.
Moreover, trade liberalization policies have significantly contributed to sustaining economic
growth. Vietnam’s participation in key trade agreements such as the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam
Free Trade Agreement (EVFTA) has enhanced its access to international markets (WTO Center,
2016). These agreements have not only increased export volumes but also diversified markets,
reducing reliance on specific economies. Consequently, the benefits of these policies are
reflected in the robust performance of Vietnam’s export-driven sectors, including textiles,
electronics, and agricultural products. Collectively, these policy responses have laid a strong
foundation for sustained economic resilience and growth, as evidenced by the swift recovery in
GDP growth to 8.02% in 2022 following the pandemic-induced downturn. (General Statistic
Office, 2022)
5. Challenges and Recommendations - thùy
Vietnam faces several obstacles to sustaining growth, including global economic uncertainties,
domestic skill gaps, and uneven infrastructure development. The reliance on imported raw
materials makes industries vulnerable to supply chain disruptions, while environmental concerns
from industrial activities pose long-term risks. Balancing growth across regions and sectors
remains a pressing issue.
To address these challenges, Vietnam should diversify its economy with a focus on technology
and sustainable industries, invest in workforce training to address skill shortages, and accelerate
infrastructure development in underdeveloped areas. (Ritu Bhandari, 2023) Strengthening
environmental policies and promoting higher-value exports will also enhance economic
resilience. These measures will help Vietnam build on its recent achievements and secure
sustainable growth.
6. Conclusion
Vietnam’s economic growth over the past years demonstrates its adaptability and resilience in
navigating challenges. Key policy measures and trade agreements have driven recovery and
development, but continued efforts are needed to address structural issues and ensure balanced,
sustainable growth. By prioritizing diversification, workforce development, and environmental
sustainability, Vietnam can maintain its trajectory as a dynamic economy in Southeast Asia.
NGUỒN
1. Policy Responses to Cope with COVID-19 in Vietnam
Nguyen, T. T. H., et al. (2022). Policy responses to cope with COVID-19 in Viet Nam.
ADBI Working Paper 1359. Retrieved from EconStor
2. A New Model for Vietnam's Economic Growth in 2021-2030
ACIAR. (2021). Final report: A new model for Vietnam's economic growth in 2021-2030
(target-investment policy based on regional comparative advantages) and vision to 2050:
Quantitative scenario assessment. Retrieved from ACIAR
3. Vietnam's Economic Development: Policies, Challenges, and Prospects
CEPR. (2012). Vietnam's economic development: Policies, challenges and prospects for
the future. Retrieved from CEPR
4. Economic Growth, Poverty, and Household Welfare in Vietnam
Glewwe, P., Agrawal, N., & Dollar, D. (Eds.). (2004). Economic growth, poverty, and
household welfare in Vietnam. World Bank Publications. Retrieved from World Bank
5. Relationship Between Inflation and Economic Growth in Vietnam
Pham, H. T., & Nguyen, T. H. (2022). Relationship between inflation and economic
growth in Vietnam. ResearchGate. Retrieved from ResearchGate
6. Public Investment: An Important Driver of Vietnam's Economic Growth
General Statistics Office of Vietnam. (2023). Public investment – an important driver of
Vietnam's economic growth in the first 6 months of 2023. Retrieved from GSO
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