Vietnam - Economy

Economy

Vietnam has been, for much of its history, a predominantly agricultural civilization 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 collectivization 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 a total 2011 output of 318,000 barrels per day (50,600 m3/d). 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. According to the CIA World Factbook, the unemployment rate in Vietnam stood at 2.3% in 2011.

In 2012, Vietnam's nominal GDP reached US$135.411 billion, with a nominal GDP per capita of $1,498, according to the International Monetary Fund (IMF). According to a December 2005 forecast by Goldman Sachs, the Vietnamese economy will become the world's 17th-largest by 2025, with an estimated nominal GDP of $436 billion and a nominal GDP per capita of $4,357. 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.