Vietnam Economy Profile 2008

Economy - overview

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 (purchasing power parity)

$222.5 billion (2007 est.)

GDP (official exchange rate)

$66.4 billion (2007 est.)

GDP - real growth rate

8.5% (2007 est.)

GDP - per capita (PPP)

$2,600 (2007 est.)

GDP - composition by sector

agriculture: 19.4%
industry: 42.3%
services: 38.3% (2007 est.)

Population below poverty line

14.75% (2007 est.)

Household income or consumption by percentage share

lowest 10%: 2.9%
highest 10%: 28.9% (2004)

Inflation rate (consumer prices)

8.3% (2007 est.)

Investment (gross fixed)

40% of GDP (2007 est.)

Labor force

45.73 million (2007 est.)

Labor force - by occupation

agriculture: 55.6%
industry: 18.9%
services: 25.5% (July 2005)

Unemployment rate

5.1% (2007 est.)

Distribution of family income - Gini index

37 (2004)

Budget

revenues: $18.28 billion
expenditures: $19.79 billion (2007 est.)

Public debt

43.3% of GDP (2007 est.)

Industries

food processing, garments, shoes, machine-building; mining, coal, steel; cement, chemical fertilizer, glass, tires, oil, paper

Industrial production growth rate

17.1% (2007 est.)

Electricity - production

59.01 billion kWh (2007)

Electricity - consumption

51.35 billion kWh (2007)

Electricity - exports

0 kWh (2007)

Electricity - imports

0 kWh (2007)

Oil - production

319,500 bbl/day (2007)

Oil - consumption

271,100 bbl/day (2007 est.)

Oil - imports

271,100 bbl/day (2007)

Oil - exports

315,700 bbl/day (2007)

Oil - proved reserves

600 million bbl (1 January 2006 est.)

Natural gas - production

6.86 billion cu m (2007 est.)

Natural gas - consumption

6.86 billion cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

0 cu m (2007)

Natural gas - proved reserves

184.7 billion cu m (1 January 2006 est.)

Current Account Balance

-$1.199 billion (2007 est.)

Agriculture - products

paddy rice, coffee, rubber, cotton, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas; poultry; fish, seafood

Exports

$48.3 billion f.o.b. (2007 est.)

Exports - commodities

crude oil, marine products, rice, coffee, rubber, tea, garments, shoes

Exports - partners

US 21.2%, Japan 12.3%, Australia 9.4%, China 5.7%, Germany 4.5% (2006)

Imports

$60.75 billion f.o.b. (2007 est.)

Imports - commodities

machinery and equipment, petroleum products, fertilizer, steel products, raw cotton, grain, cement, motorcycles

Imports - partners

China 17.7%, Singapore 12.9%, Taiwan 11.5%, Japan 9.8%, South Korea 8.4%, Thailand 7.3%, Malaysia 4.2% (2006)

Reserves of foreign exchange and gold

$17.16 billion (31 December 2007 est.)

Debt - external

$24.41 billion (31 December 2007 est.)

Stock of direct foreign investment - at home

$29.23 billion (2007 est.)

Stock of direct foreign investment - abroad

$NA

Market value of publicly traded shares

$NA

Economic aid - recipient

$5.4 billion in credits and grants pledged by the 2007 Consultative Group meeting in Hanoi (2007)

Currency (code)

dong (VND)

Exchange rates

dong per US dollar - 16,119 (2007), 15,983 (2006), 15,746 (2005), NA (2004), 15,510 (2003)

Fiscal year

calendar year