Viet Nam's economic journey toward prosperity
VGP - Viet Nam has grown into a well-diversified economy that strikes an attractive balance between export-led growth and growing domestic demand that enjoys robust exports in addition to a growing domestic consumer base.
According to Israeli-based financial market news site seekingalpha.com, as Viet Nam's economy rapidly expands, outpacing their ASEAN peers, it presents a unique opportunity for investors.
This growth is underpinned by diverse sectors, from high-tech manufacturing to natural resources, and bolstered by significant trade relationships, especially with the U.S. and China.
However, Viet Nam's increasing importance in global trade obscures its robust domestic market, fueled by a growing middle class and favorable demographics.
From poverty to prosperity
Seeking Alpha, the largest investing community in the world, noted that in 2022, Viet Nam exported roughly US$371.4 billion in goods and services. This figure represents a striking turnaround for a country that experienced limited economic activity and a low standard of living just forty years ago.
Viet Nam's journey towards economic prosperity over the past few decades has been driven largely by sweeping economic reforms known as "Doi Moi", initiated in 1986.
These reforms marked a radical shift from a centrally planned economy to a market-oriented one, laying the groundwork for Viet Nam's increased exports and deeper integration into the global economy.
The liberalization of trade policies under Doi Moi was instrumental in attracting foreign direct investment (FDI).
Major multinational corporations were enticed to set up manufacturing and export-oriented units in Viet Nam, benefiting from its strategic location, competitive labor costs, and increasingly skilled workforce.
This led to a surge in exports, particularly in textiles, footwear, and electronics, propelling Viet Nam into a significant player in the global supply chain.
Viet Nam's accession to the World Trade Organization (WTO) in 2007 marked another milestone, further integrating it into the global economy.
The country has since been a part of numerous free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Viet Nam Free Trade Agreement, enhancing its export potential.
This export-led growth, in turn, has fueled domestic demand. As exports grew, so did the economy, resulting in increased incomes and a burgeoning middle class. This new wealth has translated into higher consumer spending within Viet Nam.
The growth in domestic demand is evident in the rising consumption of goods and services, increased urbanization, and the expansion of the retail sector.
Viet Nam's economic reforms have created a virtuous cycle: reforms spurred exports, which in turn drove economic growth, leading to increased domestic demand, Seeking Alpha highlighted.
This trajectory has positioned Viet Nam as a dynamic and integral part of the global economy, with a domestic market that continues to show robust growth potential.
When compared with other emerging markets countries, Viet Nam sits in the middle of the pack, with a higher private consumption ratio to GDP than Saudi Arabia and China.
Despite macro shocks including the COVID-19 pandemic, local Vietnamese stocks have outperformed broad emerging markets benchmarks since 2018, underlined the website, adding that given Viet Nam's economic and market-structure progress over the past decade, investors should look closely at this emerging opportunity./.
