Sunday, November 19, 2017

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Overview of Vietnam

Vietnam is GBS’s primary area of focus and Southeast Asia’s fastest growing economy. The country has grown by an average of over 7.1% over the past decade in real GDP terms, supported by a domestic consumption-led economy and an aggressive economic reform program implemented by a stable and responsive government. Economists forecast Vietnam to grow at the same speed as India and China over the next decade given the following underlying trends:

The middle class story

Vietnam’s demographic advantages support strong continued growth in domestic consumption:

  • Large population: a population of over 86 million people, a high proportion of whom are in the workforce (56% between the ages of 19 and 64), supports higher consumer spending. With a large proportion of the population (38% under the age of 19) set to enter the workforce in the next 10-15 years, growth in consumer spending is expected to continue
  • Rapidly rising income levels: Based on real GDP per capita and adjusted for purchasing power parity, income levels have increased three-fold in the past 20 years, from $840 in 1988 to approximately $2500 today, leading to a doubling in the size of the middle class over the past 5 years.
  • The middle class is driving growth: This demographic shift accounts for the expansion in basic sectors such as food & beverage, which will continue to account for more than 50% of total consumption, as well as in financial services (e.g., 28,000% growth in the number of debit cards from 2003-2008). Penetration of these products and services will continue to drive growth as income levels rise further Detail

Stable and responsive government allowing for aggressive economic reforms

Vietnam has one of the most stable political environments in the world (ranked 139 in the world on the Political Instability Index compared to 40-55 for most ASEAN countries, 124 for China and 135 for India) providing an ideal environment for the government to pursue further reforms aggressively.

Vietnam’s reform program, comprising land reform, foreign sector reform, SOE reform, and private sector reform, has been similar in both scope and success to that of China. Having launched the Doi Moi (“renovation") initiatives in 1986, the pace of reform in Vietnam is now moving at an even faster rate than China’s did at a similar point in its economic development, which bodes well for the future of the economy and the country.

Even with its strong growth, Vietnam also enjoys the lowest GDP volatility in the region.

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About VICLAW

VICLAW is a top 10 best business law firms & outsourcing company in Vietnam with a network of associate firms in South East Asia, Middle East, Japan, HongKong and Poland.

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