Viet Nam's upper-middle-income status marks milestone on path to high-income economy: WB

In her recent interview, the WB Director said, this year, Viet Nam is one of six economies worldwide to move into a higher income category. Seventeen years after entering the lower-middle-income category (in 2009), the nation has now reached upper-middle-income status.

"This is an important milestone in the country's development trajectory. It reflects the remarkable transformation Viet Nam has achieved through decades of sustained reforms, strong economic growth and rising living standards", she reiterated.

Over the past years, Viet Nam has consistently been one of the fastest-growing economies in the region, supported by resilient foreign investment, surging exports, and growing domestic services. This milestone can further help reinforce international confidence in Viet Nam's long-term economic prospects and the country's position as a destination for investment.

At the same time, the significance of this upgrade goes well beyond the classification itself. As countries develop, the nature of the growth challenges also changes.

The drivers that helped Viet Nam reach upper-middle-income status will remain important, but sustaining future growth will increasingly depend on productivity, innovation, stronger domestic enterprises, and the ability to generate greater value across the economy.

The next chapter will be defined not only by how fast Viet Nam grows but also by the quality of that growth. That will be central to Viet Nam's journey towards becoming a high-income economy by 2045.

Key reforms for Viet Nam's high-income ambition

According to the WB Director, the journey ahead remains a significant one. Based on this year's thresholds, Viet Nam's gross national income (GNI) per capita would need to nearly triple to reach high-income status.

That helps explain why, since 1990, only 27 economies have successfully transitioned from middle- to high-income status, and more than a third of those benefited from unique circumstances such as accession to the European Union or significant natural resource wealth.

The encouraging news is that Viet Nam already has many of the essential ingredients in place. The country has a young and talented workforce, macroeconomic stability, a strategic location at the heart of Asia's growth region, and, perhaps most importantly, a strong ambition and demonstrated willingness to reform and adapt. These are advantages that many countries do not have.

Turning the 2045 vision into reality will require addressing several important challenges. One is the growing divergence between foreign-invested and domestic firms.

While foreign investment has been a powerful driver of Viet Nam's success, the next stage of development will depend on strengthening domestic enterprises, particularly SMEs, so they can innovate, grow, and create more quality jobs while participating more deeply in global value chains.

Viet Nam also operates in an increasingly uncertain global environment. As one of the world's most open economies, maintaining resilience to external shocks while continuing to diversify the drivers of growth will become increasingly important.

Public investment is becoming one of key levers for growth, with planned volume for the 2026 – 2030 period nearly triple those of the previous five-year period. But public investment needs to move from faster disbursement to higher impact. This means better project selection, stronger preparation, more efficient procurement, and mechanisms to de-risk and crowd-in private investment.

Infrastructure will play a central role in supporting the next stage of development. The Government's ambitious public investment program can help address critical infrastructure bottlenecks, but public resources alone will not be sufficient to meet Viet Nam's long-term infrastructure ambitions.

This is where the WB Group is working with the Government to rethink how infrastructure financing is approached, creating the conditions to mobilize private capital through well-prepared, bankable projects. Together, public and private investment can help deliver the transport, energy, and digital infrastructure needed to sustain future growth.

Long-term growth will also require deeper and more diversified sources of finance beyond the banking system. Continued capital market reforms can help ensure that capital and bank credit flow to the most productive and dynamic firms, including smaller enterprises with the potential to grow.

Building on the recent FTSE Russell upgrade, continued reforms can further strengthen Viet Nam's capital markets, broaden the investor base, and reinforce the country's position in global financial markets.

At the same time, capable firms need capable people. As Viet Nam moves toward high-income status, continued investment in innovation, skills development, and technology adoption will be essential to help businesses move up the value chain, compete in higher value-added activities, and create more and better jobs.

More importantly, better rules are necessary but not sufficient. Viet Nam has made meaningful regulatory progress, but sustainable growth ultimately depends on systemic commitment: every level of government, every institution, every stakeholder aligned behind the same direction towards the same goal.

Sherman said, Viet Nam's reclassification to upper-middle-income status creates new opportunities to deepen the country's partnership with the WB Group, investors, and the broader development community.

As Viet Nam reaches a new stage of development, the challenges it faces also become more sophisticated. Addressing them will require financing and investment that match the scale and complexity of the country's next phase of development.

The WB Group's capabilities are well aligned with these evolving needs. Alongside competitive, long-term financing, the bank brings global knowledge, technical expertise, and experience from supporting countries that have successfully navigated similar transitions (such as Poland and the Republic of Korea) while adapting those lessons to Viet Nam's own context.

"We can also help strengthen implementation capacity, and bringing together development partners, private sector expertise, and international experience to support the delivery of impact at scale", she shared.

The WB is working with the Government on the next Country Partnership Framework, with a focus on identifying a program of policy advice, technical support and investments that reflects Viet Nam's evolving priorities and long-term development ambitions, added the WB Director./.