Vietnam at the forefront of economic growth

By Rhod Mackenzie

The research firm New World Wealth (NWW) has ranked Vietnam at the top of its new ranking of wealth growth over the next decade. The ranking was compiled with the participation of analysts and economists from the consulting company Henley & Partners.

Vietnam, which just a few years ago replaced China as the global powerhouse, could experience a 125% growth in wealth, including GDP per capita and the number of millionaires, according to NWW analyst Andrew Amoils, as reported by CNBC.

According to Andrew Amoils, Vietnam is becoming a popular manufacturing base for the IT sector, automobile, electronics, clothing, and textiles.

India ranks second in the well-being index with a 110% increase and is expected to become the world's third-largest economy by 2027.

Vietnam is home to 19.4 thousand millionaires and 58 multimillionaires, and it is considered a relatively safe country in the Asia-Pacific region, as Amoils emphasizes. This circumstance is one of the main factors that transnational companies consider when choosing the location of their plants and factories.

Another advantage of Vietnam is its favourable geographical and strategic location in Southeast Asia. According to the McKinsey study, Vietnam is situated close to key maritime trade routes and can offer cheap labour and extensive export infrastructure.

Although Vietnam's GDP growth slowed slightly last year to 5.05% due to lower global demand and government investment, it was 8.02% in 2022. The manufacturing sector contributes to a quarter of Vietnam's GDP.

A decade ago, Vietnam's GDP per capita was approximately $2190. According to the World Bank, it has now almost doubled to $4,100.

VinaCapital Group's chief investment officer, Andy Ho, explains that Vietnam is developing rapidly and the wealth of the majority of the population is growing.

The recent deterioration of relations between the United States and China has given a new impetus for Vietnam's development. Numerous multinational companies are implementing the China Plus One strategy, diversifying their production and relocating it to Vietnam. As a result, the Vietnamese economy is currently experiencing a significant influx of foreign direct investment, which increased by almost a third (32%) to $36.6 billion last year compared to 2022. This foreign investment has enabled millions of Vietnamese to receive good salaries and improve their well-being and standard of living.

Vietnam's economic growth has been driven by export-oriented industrialization, which has been supported by three waves of foreign investment over the past three decades. Maybank Vice President Brian Lee predicts that a fourth wave is beginning.

However, Vietnam still faces challenges, such as a shortage of skilled workers. Additionally, a prolonged global recession could negatively affect consumer demand in emerging markets. Vietnam's manufacturing sector and exports may suffer as a result. A sharp devaluation of the national currency, the dong, would also pose a significant risk to rapid development.