Vietnam's Economic Performance in 2024: A Resilient Yet Unequal Reality

In 2024, Vietnam’s economy emerged as one of Southeast Asia's most dynamic, with official figures reporting impressive growth across industrial production, trade, and foreign investment.

Yet, beneath this surface of progress lies a complex story—one that reflects the challenges of unverified data, economic inequality, and an everyday reality that seems disconnected from the rosy picture painted by macroeconomic indicators.

This article delves into the strengths and shortcomings of Vietnam's economy in 2024, offering a comprehensive and balanced view of the nation's economic landscape in Asia and the world.

Economic Growth and Questionable Transparency

Vietnam’s General Statistics Office (GSO) and General Department of Vietnam Customs are the country’s primary economic data sources. Their reports for 2024 highlight significant achievements:

• GDP growth is projected to exceed 7% for the year.
• Industrial production rose by 8.4% in the first 11 months.
• Total trade turnover reached USD 715.55 billion, up 15.4% year-on-year, with a trade surplus of USD 24.31 billion.

However, it is important to recognize that these statistics are not independently verified. In Vietnam, economic data is controlled and disseminated by state institutions, and there is no third-party mechanism to audit or validate these figures. This lack of transparency has led to widespread skepticism among both local citizens and international observers.

For many Vietnamese people, these impressive numbers feel disconnected from their daily lives. While the economy is reportedly thriving, many citizens question why their living standards do not reflect the same growth trajectory.

The Disconnect Between Data and Everyday Reality

Despite the official narrative of progress, anecdotal evidence suggests a more complex reality. Across Vietnam, people are grappling with economic pressures that have persisted or worsened in recent years.

1. Rising Cost of Living
   Inflation, while officially reported as "under control," has significantly impacted household budgets. Prices for essential goods such as rice, meat, and fuel have risen steadily, straining many families’ ability to make ends meet. Urban residents face skyrocketing housing costs, while rural communities contend with stagnant incomes and limited job opportunities.
2. Income Inequality
   While some industries, particularly those tied to foreign direct investment (FDI), have thrived, the benefits of this growth have not been evenly distributed. Workers in low-paying factory jobs—often in export-oriented sectors like textiles or electronics—report long hours, limited wage growth, and poor working conditions.
3. Public Sentiment
   Conversations in local markets, cafés, and social media platforms reveal a pervasive sense of dissatisfaction. Many Vietnamese feel that life has not improved compared to previous years, and some argue it has deteriorated. “The numbers they publish don’t mean much to us,” a Hanoi resident commented. “We see prices going up and jobs becoming harder to find. How is that progress?”

Sectoral Highlights: Growth Amid Inequality

Industrial Production

The manufacturing and processing industries remain the backbone of Vietnam’s economy, contributing significantly to its GDP growth. In November 2024, industrial production grew by 8.9% year-on-year, driven by strong performance in electronics, textiles, and machinery exports. However, much of this growth is fueled by foreign-invested enterprises, which often repatriate profits rather than reinvesting them locally.

Retail and Domestic Consumption

Retail sales grew by 8.8% year-on-year, reaching VND 5,822.3 trillion in the first 11 months. However, this figure does not account for inflation-adjusted purchasing power. Many families report cutting back on discretionary spending, focusing instead on basic necessities. The apparent growth in retail sales may reflect higher prices rather than increased consumption.

Foreign Trade

Vietnam’s total trade turnover of USD 715.55 billion in the first 11 months reflects its deep integration into global supply chains. Exports, which grew by 14.4%, include electronics, garments, and agricultural products. Yet, while export figures shine, the workers producing these goods often face stagnant wages and precarious employment conditions.

Foreign Investment

FDI inflows, totaling USD 21.68 billion by November 2024, have been celebrated as a sign of Vietnam’s attractiveness to international investors. However, critics argue that the government’s reliance on FDI comes at the expense of fostering domestic enterprises, which remain underdeveloped and struggle to compete.

Vietnam in the Regional and Global Context

In comparison to its Asian neighbors, Vietnam’s reported growth rates are impressive:

• China’s economy is forecasted to grow by 4.5% in 2024, reflecting a slowdown in its once-dominant growth.
• Indonesia and Thailand, major players in Southeast Asia, are expected to grow by 5.1% and 3%, respectively.

Globally, Vietnam’s growth outpaces advanced economies like the United States and the Eurozone, where growth rates often hover below 2%. This positions Vietnam as a rising star in the global economy—at least on paper.

Challenges and Contradictions

Despite these achievements, Vietnam faces significant challenges that question the sustainability of its growth:

1. Environmental Issues
   Vietnam’s heavy reliance on coal has led to record emissions levels, posing environmental and health risks. Efforts to transition to renewable energy are underway but remain limited.
2. Natural Disasters
   Typhoon Yagi, which struck in mid-2024, caused significant economic disruptions, particularly in agriculture. The government estimates a GDP reduction of 0.15% due to the storm’s impact.
3. Structural Inefficiencies
   Vietnam’s economic model relies heavily on export-oriented manufacturing and FDI. Without significant investment in education, innovation, and infrastructure, the country risks being trapped in the "middle-income" category.

Conclusion: A Mixed Reality

Vietnam’s economic narrative in 2024 is one of resilience and contradiction. On one hand, the official figures reflect a nation that is growing rapidly, outpacing many of its regional peers. On the other hand, the lived experiences of ordinary citizens paint a more sobering picture of stagnation and inequality.

As Vietnam looks to the future, transparency and inclusivity will be critical. Economic data must not only reflect growth but also align with the realities of its people. By addressing these challenges, Vietnam can transition from an economy of numbers to one of real, sustainable progress for its citizens.

Amalie 

Vanguard Business Information