Hanoi (VNA) – Vietnam's economy has demonstrated remarkable resilience in recent years despite a succession of global shocks, according to Tehmina Khan, the World Bank's Lead Economist for Vietnam, Cambodia and Laos, who highlighted the country's strong fundamentals, ambitious reform agenda and long-term growth potential.
Speaking to the Vietnam News Agency, Khan said Vietnam's ability to weather external shocks has improved steadily, helping sustain robust economic growth. In 2025, the economy expanded by 8%, the highest rate among ASEAN economies, despite significant challenges stemming from global trade uncertainty and shifting tariff policies.
She attributed this resilience to certain fundamental strength, including competitive labour costs, an expanding middle class, and strong infrastructure. These are the advantages that have positioned Vietnam to benefit from the regional and global restructuring of value chains. And as the AI boom continues to unfold, these same strengths have placed Vietnam in a highly favourable position to benefit from trade in related sectors, such as data centres and semiconductors.
Khan noted that Vietnam is among those few emerging market economies where an immense array of reforms is currently unfolding, generating considerable excitement and optimism. The reforms that the Government has been pushing over the last two years are the most significant since the Doi Moi (Renewal) era – a comprehensive, fast-paced reorganisation and restructuring of the state that could be potentially transformative if implemented well.
She said Vietnam's aspiration to become a high-income economy by 2045 requires a commensurate shift in the capacity of the public sector. The reforms underway go well beyond administrative streamlining. They cover many spheres of economic life: slashing red tape, easing regulatory burdens on the private sector, modernising tax and customs systems, reforming corporate insolvency frameworks, opening capital markets, and accelerating the energy transition. Taken together, these are once-in-a-generation reforms, and this is a truly exciting moment for Vietnam’s economy.
While describing Vietnam's economic fundamentals as relatively strong, Khan pointed to some critical bottlenecks that do need attention.
The first is a growing divergence between FDI firms and the domestic private sector. Foreign-invested firms account for only 5% of all firms in the economy, yet they are a significant driver of exports. While the FDI sector has continued to strengthen, domestic firms, especially small and medium-sized enterprises, are starting to struggle with access to capital and resources.
Second, while there remains considerable fiscal space, external buffers are somewhat thin. The economy is highly exposed to external demand and remains sensitive to shocks in its supply chains.
A third area of concern is the high credit intensity in the economy and elevated levels of corporate leverage – the highest amongst ASEAN countries. This is a source of risk in the event of a negative external shock.
The fourth area relates to public investment. The Government has recognised that there are infrastructure deficits that need to be addressed: to lower logistics costs, strengthen firm competitiveness, and improve market connectivity, both domestically and internationally. But implementation is critical. It will be important to make sure that going forward, public investment is executed well, projects are selected well, and that they address the right bottlenecks, so that the productive capacity of the economy is expanded.
According to Khan, reforms inevitably take time to deliver results, but Vietnam is moving in the right direction with a clear vision and high level of ambition. The key challenge now lies in execution. She stressed the need to rebalance growth, support domestic firms to have the conditions to thrive, address financial sector vulnerabilities, and execute public investment plans effectively. Overarching all of this are two foundational priorities: preserving macroeconomic stability, which anchors confidence; and strengthening risk management, which ensures that faster growth does not translate into new sources of vulnerability.
Looking ahead, Khan said Vietnam's medium-term prospects remain strong, although near-term risks have increased due to uncertainty in the global economic environment. The World Bank expects global growth to soften this year, which could also moderate Vietnam's growth performance.
Nevertheless, the organisation projects that Vietnam’s growth rate this year and in the next few years will remain in the range of 7% to 8%, which is considerably higher than any other ASEAN economy or major emerging market. That remains stellar growth by any measure.
Regarding Vietnam's goal of achieving double-digit growth during the 2026–2030 period, Khan said the World Bank believes the target is achievable and serves as a worthwhile objective. However, she emphasised that the quality of growth is what fundamentally matters more.
Even if growth is a little slower than the target, what matters is that growth is more inclusive, creates more and better jobs, and strengthens resilience against future shocks, she said./.
