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Vietnam Economy


Vietnam has been, for much of its history, a predominantly agricultural civilisation based on wet rice cultivation. However, the Vietnam War destroyed much of the country's agrarian economy, leading the post-war government to implement a planned economy to revitalise agriculture and industrialise the nation. The collectivisation of farms, factories and economic capital was implemented, and millions of people were put to work in government programs. For a decade following the Vietnam War, Vietnam's economy was plagued with inefficiency and corruption in state programs, poor quality and underproduction, and restrictions on economic activity. It also suffered from the post-war trade embargo instituted by the United States and most of Europe. These problems were compounded by the erosion of the Soviet bloc, which included Vietnam's main trading partners, in the late 1980s.

In 1986, the Sixth Party Congress of Vietnam introduced free market economic reforms as part of the Đổi Mới reform program, resulting in a socialist-oriented market economy. Private ownership was encouraged in industries, commerce and agriculture. Thanks largely to these reforms, Vietnam achieved around 8% annual GDP growth between 1990 to 1997, and the economy continued to grow at an annual rate of around 7% from 2000 to 2005, making Vietnam one of the world's fastest growing economies. Growth remained strong even in the face of the late-2000s global recession, holding at 6.8% in 2010, but Vietnam's year-on-year inflation rate hit 11.8% in December 2010, according to a GSO estimate. The Vietnamese dong was devalued three times in 2010 alone.

Manufacturing, information technology and high-tech industries now form a large and fast-growing part of the national economy. Though Vietnam is a relative newcomer to the oil industry, it is currently the third-largest oil producer in Southeast Asia, with an output of 400,000 barrels per day. Like its Chinese neighbours, Vietnam continues to make use of centrally planned economic five-year plans.

Deep poverty, defined as the percentage of the population living on less than $1 per day, has declined significantly in Vietnam, and the relative poverty rate is now less than that of China, India, and the Philippines. This decline in the poverty rate can be attributed to equitable economic policies aimed at improving living standards and preventing the rise of inequality; these policies have included egalitarian land distribution during the initial stages of Đổi Mới, investment in poorer remote areas, and subsidising of education and healthcare.

In 2012, Vietnam's nominal GDP reached $135.411 billion, with a nominal GDP per capita of $1,498, according to the International Monetary Fund. According to a 2008 forecast by PricewaterhouseCoopers, Vietnam may be the fastest-growing of the world's emerging economies by 2025, with a potential growth rate of almost 10% per annum in real dollar terms. In 2012, HSBC predicted that Vietnam's total GDP would surpass Norway, Singapore and Portugal by 2050.

Since the early 2000s, Vietnam has applied sequenced trade liberalisation, a two-track approach opening some sectors of the economy to international markets while protecting others. In July 2006, Vietnam updated its intellectual property legislation to comply with TRIPS, and it became a member of the WTO on 11 January 2007. Vietnam is now one of Asia's most open economies: two-way trade was valued at around 160% of GDP in 2006, more than twice the contemporary ratio for China and over four times the ratio for India. Vietnam's chief trading partners include China, Japan, Australia, the ASEAN countries, the United States and Western Europe. In 2011, Vietnam's total international trade, including both exports and imports, was valued at approximately $200 billion.

As a result of several land reform measures, Vietnam has become a major exporter of agricultural products. It is now the world's largest producer of cashew nuts, with a one-third global share; the largest producer of black pepper, accounting for one-third of the world's market; and the second-largest rice exporter in the world, after Thailand. Vietnam has the highest proportion of land use for permanent crops – 6.93% – of any nation in the Greater Mekong Subregion. Other primary exports include coffee, tea, rubber, and fishery products. However, agriculture's share of Vietnam's GDP has fallen in recent decades, declining from 42% in 1989 to 20% in 2006, as production in other sectors of the economy has risen.


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. While Vietnam's economy remains dominated by state-owned enterprises, which still produce about 40% of GDP, Vietnamese authorities have reaffirmed their commitment to economic liberalisation and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive export-driven industries. Vietnam joined the World Trade Organization in January 2007 following more than a decade-long negotiation process. Vietnam became an official negotiating partner in the developing Trans-Pacific Partnership trade agreement in 2010. Agriculture's share of economic output has continued to shrink from about 25% in 2000 to about 22% in 2011, while industry's share increased from 36% to 40% in the same period. Deep poverty has declined significantly, and Vietnam is working to create jobs to meet the challenge of a labour force that is growing by more than one million people every year. The global recession has hurt Vietnam's export-oriented economy, with GDP in 2009-11 growing less than the 7% per annum average achieved during the last decade. In 2011, exports increased by more than 33%, year-on-year, and the trade deficit, while reduced from 2010, remained high, prompting the government to maintain administrative trade measures to limit the trade deficit. Vietnam's managed currency, the dong, continues to face downward pressure due to a persistent trade imbalance. Since 2008, the government devalued it in excess of 20% through a series of small devaluations. Foreign donors pledged nearly $8 billion in new development assistance for 2011. However, the government's strong growth-oriented economic policies have caused it to struggle to control one of the region's highest inflation rates, which reached as high as 23% in August 2011 and averaged 18% for the year. In February 2011, Vietnam shifted its focus away from economic growth to stabilizing its economy and tightened fiscal and monetary policies. In early 2012 Vietnam unveiled a broad "three pillar" economic reform program, proposing the restructuring of public investment, state-owned enterprises and the banking sector. Vietnam's economy continues to face challenges from low foreign exchange reserves, an undercapitalised banking sector, and high borrowing costs. The near-bankruptcy and subsequent default of the state-owned-enterprise Vinashin, a leading shipbuilder, led to a ratings downgrade of Vietnam's sovereign debt, exacerbating Vietnam's borrowing difficulties.
GDP (purchasing power parity) : $303.8 billion (2011 est.)
GDP (official exchange rate) : $122.7 billion (2011 est.)
GDP - real growth rate : 5.9% (2011 est.)
GDP - per capita (PPP) : $3,400 (2011 est.)
GDP - composition by sector : agriculture: 22%

industry: 40.3%

services: 37.7% (2011 est.)
Labour force : 46.48 million (2011 est.)
Labour force - by occupation : agriculture: 48%

industry: 22.4%

services: 29.6% (2011)
Unemployment rate : 2.3% (2011 est.)
Population below poverty line : 14.5% (2010 est.)
Household income or consumption by percentage share : lowest 10%: 3.2%

highest 10%: 30.2% (2008)
Distribution of family income - Gini index   37.6 (2008)
Investment (gross fixed) : 34.6% of GDP (2011 est.)
Budget : revenues: $32.8 billion

expenditures: $35.7 billion (2011 est.)
Taxes and other revenues : 26.7% of GDP (2011 est.)
Budget surplus (+) or deficit (-) : -2.4% of GDP (2011 est.)
Public debt : 57.3% of GDP (2011 est.)

note: data cover general government debt, and excludes debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by sub national entities, as well as intra-governmental debt; intra-governmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
Inflation rate (consumer prices) : 18.7% (2011 est.)
Central bank discount rate : 13% (31 December 2011)
Commercial bank prime lending rate : 16.95% (31 December 2011 est.)
Stock of narrow money : $32.94 billion (31 December 2011 est.)
Stock of broad money : $133.2 billion (31 December 2011 est.)
Stock of domestic credit : $152.9 billion (31 December 2011 est.)
Market value of publicly traded shares   $26 billion (31 December 2011 est.)
Agriculture - products : paddy rice, coffee, rubber, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas; poultry; fish, seafood
Industries : food processing, garments, shoes, machine-building; mining, coal, steel; cement, chemical fertiliser, glass, tires, oil, mobile phones
Industrial production growth rate : 6% (2011 est.)
Electricity - production : 106 billion kWh (2011 est.)
Electricity - consumption : 101 billion kWh (2011 est.)
Electricity - exports : 373 million kWh (2009 est.)
Electricity - imports : 281 million kWh (2009 est.)
Oil - production : 318,100 bbl/day (2011 est.)
Oil - exports : 267,500 bbl/day (2009 est.)
Oil - imports : 0 bbl/day (2009 est.)
Oil - proved reserves : 4.4 billion bbl (1 January 2012 est.)
Natural gas - production : 8.5 billion cu m (2011 est.)
Natural gas - consumption : 9.5 billion cu m (2011 est.)
Natural gas - exports : 0 cu m (2010 est.)
Natural gas - imports : 1 billion cu m (2011 est.)
Natural gas - proved reserves : 699.4 billion cu m (1 January 2012 est.)
Current account balance : -$1.896 billion (2011 est.)
Exports : $95.32 billion (2011 est.)
Exports - commodities : clothes, shoes, marine products, crude oil, electronics, wooden products, rice, machinery
Exports - partners : US 18%, China 11%, Japan 11%, Germany 3.7% (2011 est.)
Imports : $97.83 billion (2011 est.)
Imports - commodities : machinery and equipment, petroleum products, steel products, raw materials for the clothing and shoe industries, electronics, plastics, automobiles
Imports - partners : China 22%, South Korea 13.2%, Japan 10.4%, Taiwan 8.6%, Thailand 6.4%, Singapore 6.4% (2011 est.)
Reserves of foreign exchange and gold : $17.67 billion (31 December 2011 est.)
Debt - external : $39.73 billion (31 December 2011 est.)
Stock of direct foreign investment - at home : $65.82 billion (31 December 2011 est.)
Stock of direct foreign investment - abroad : $7.7 billion (31 December 2009 est.)
Exchange rates : dong (VND) per US dollar - 20,509.75 (2011 est.); 18,612.92 (2010 est.); 17,799.6 (2009); 16,548.3 (2008); 16,119 (2007)
Fiscal year : calendar year






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