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Country Context

The country has enjoyed impressive growth rates over the last 20 years, averaging 7-8% per annum with a slight decline to 6% per annum during 2009-2010. To a large extent, the growth has been driven by a shift from a centrally-planned to a market-led economy since the initiation of the ‘Doi Moi’ reform process in 1986. In this process, the structure of the economy has shifted away from agriculture, which declined to about 20% of GDP, towards manufacturing and services. The country aims to become a modern and industrialized country by 2020. While the agricultural sector remains the largest employer, Viet Nam's continued industrialization implies an increasing demand of specialized skills and a growing pressure to create sustainable, productive and decent employment for all, especially for youth.

Viet Nam’s accession to the World Trade Organization (WTO) increased its exposure to competition on international markets and prompted a focus on further eliminating the structural weaknesses of state enterprises and the banking sector. Manufacturing remains rooted in labour-intensive, low-tech sectors accounting for 65% of manufactured exports. As a result, challenges include enhancing productivity, developing basic infrastructure as well as securing the delivery of more efficient public services and a continued macroeconomic stability. Compliance with WTO SPS/TBT commitments and standards is another challenge affecting the ability to export agricultural and industrial products. The rapid industrialization in Viet Nam has further contributed to the serious degradation of the environment, which in turn aggravates the negative effects of climate change. 

The incidence of monetary poverty declined significantly from 37.4% in 1998 to 9.6% in 2012. Despite the country's improved access to basic services, the multi-dimensional poverty index shows a much higher rate of non-monetary poverty, with significant differences between poorer and richer provinces. In 2010, Viet Nam, with an annual per capita GDP of USD 1200, joined the league of middle-income countries.