Viet Nam has made significant reform progress over the past decades, enabling remarkably strong economic growth. Real GDP per capita was 5.7 times as high in 2023 as in 1990. But with significant challenges ahead from trade policy uncertainty, population ageing and climate change, Viet Nam needs to advance structural reforms to strengthen competition, improve opportunities in the labour market, and make growth more sustainable, according to a new OECD report.
The latest OECD Economic Survey of Viet Nam projects that GDP will increase by 6.2% in 2025 and 6.0% in 2026, led by domestic demand. Inflation is projected at 3.7% in 2025 and 3.8% in 2026, below the central bank's target of 4.5-5.0%.
"Achieving Viet Nam's objective of becoming a high-income country by 2045 will require policies to boost productivity growth," OECD Chief Economist Alvaro Pereira said, presenting the Survey in Hanoi alongside Viet Nam's Deputy Minister of Finance Tran Quoc Phuong. "A key priority is to maintain the country's attractiveness to foreign direct investment and reap more of its benefits, including by strengthening the links between highly productive multinational enterprises and local firms."
A more price-based monetary policy framework without direct credit growth targets could facilitate more competition in financial markets and improve the allocation of capital in the economy. Fiscal policy will continue to support growth through increased public investment and should stand ready to provide further support if needed, given the potential impact of recent tariff hikes.
Improving learning outcomes, in particular for upper secondary and higher education, and in co-ordination with the business sector, would raise productivity. Strengthening competition, especially in services sectors, would also boost growth, including by easing entry and foreign investment restrictions and by creating a more level playing field between state-owned enterprises and private-sector firms.
Spending needs for the social security system and the climate transition are rising, while tax revenues are low at 19% of GDP. This imbalance calls for reforming the tax system to mobilise additional revenues, including by reducing tax expenditures in the personal income tax and the value-added tax, while improving budgetary governance and the transparency of fiscal accounts.
Reducing informality through a combination of financial incentives and stricter enforcement will make growth more inclusive. 68.5% of workers are estimated to have an informal job, and the social security system features low coverage and benefit levels. Recent reforms to enhance access to social assistance pensions and health care are welcome. Lower social security contributions for low-income workers and fewer administrative burdens for registering a business would foster formalisation.
Viet Nam is strongly affected by climate change and has committed to net-zero carbon emissions by 2050. However, rapidly increasing energy demand means that the consumption of coal is still reaching record-high levels. Reducing emissions from electricity generation by phasing out coal-fired plants and accelerating the rollout of renewable energy sources will be key for more sustainable growth.
