Economy

The Vietnam War destroyed much of the economy of Vietnam. Upon taking power, the Government created a command economy in the nation. Collectivization of farms, factories and economic capital was implemented, and millions of people were put to work in government programs. For many decades, Vietnam's economy was plagued with inefficiency and corruption in state programs, poor quality and underproduction and restrictions on economic activities and trade. It also suffered from the trade embargo from the United States and most of Europe after the Vietnam War. Subsequently, the trade partners of the Communist blocs began to erode.

In 1986, the Sixth Party Congress introduced significant economic reforms with market economy elements as part of a broad economic reform package called 'doi moi' (Renovation). Private ownership was encouraged in industries, commerce and agriculture. Vietnam achieved around 8% annual GDP growth from 1990 to 1997 and continued at around 7% from 2000 to 2005, making it the world's second-fastest growing economy. At the same time, foreign investment grew three-fold and domestic savings quintupled. Manufacturing, information technology and high-tech industries form a large and fast-growing part of the national economy.

Vietnam is still a relatively poor country with GDP of US$262.8 billion (est. 2006). This translates to US$3,100 per capita. Inflation rate was estimated at 7.5% per year in 2006. The spending power of the public has noticeably increased.

As a result of several land reform measures, Vietnam is now the largest producer of cashew nuts with a one-third global share and second-largest rice exporter in the world. Vietnam has the highest percent of land use for permanent crops, 6.93%, of any nation in the Greater Mekong Subregion. Besides rice, key exports are coffee, tea, rubber and fishery products. However, agriculture's share of economic output has declined, falling as a share of GDP from 42% in 1989 to 20% in 2006, as production in other sectors of the economy has risen.

Urban unemployment has been rising steadily in recent years due to high numbers of migration from the countryside to the cities, while rural unemployment is already at critical levels.

Among other steps taken in the process of transitioning to a market economy, Vietnam updated its intellectual property legislation in July 2006 to comply with TRIPS. Vietnam was accepted into the WTO on November 7, 2006. Vietnam's chief trading partners include Japan, Australia, ASEAN countries, the US and Western European nations.

Facts and Figures

• GDP:
  • Purchasing power parity: $262.8 billion
  • Official exchange rate: $48.43 billion
  • Real growth rate: 8.2%
  • Per capita (PPP): $3,100
  • Composition by sector:
    • Agriculture: 20.1%
    • Industry: 41.8%
    • Services: 38.1%
• Labour force:
  • Total: 44.58 million
  • By occupation:
    • Agriculture: 56.8%
    • Industry: 37%
    • Services: 6.2%
• Unemployment rate: 2%
• Population below poverty line: 19.5%
• Household income or consumption by percentage share:
  • Lowest 10%: 3.6%
  • Highest 10%: 29.9%
• Inflation rate (consumer prices): 7.5%
• Investment (gross fixed): 32.6% of GDP
• Budget:
  • Revenues: $15.42 billion
  • Expenditures: $16.63 billion; including capital expenditures of $1.8 billion
• Public debt: 47.5% of GDP
• Agriculture - products:
  • Paddy rice
  • Coffee
  • Rubber
  • Cotton
  • Tea
  • Pepper
  • Soybeans
  • Cashews
  • Sugar Cane
  • Peanuts
  • Bananas
  • Poultry
  • Fish
  • Seafood
• Industries:
  • Food processing
  • Garments
  • Shoes
  • Machine-building
  • Mining
  • Coal
  • Steel
  • Cement
  • Chemical fertilizer
  • Glass
  • Tires
  • Oil
  • Paper
• Industrial production growth rate: 11.3%
• Electricity:
  • Production: 40.11 billion kWh
  • Consumption: 37.3 billion kWh
  • Exports: 0 kWh
  • Imports: 0 kWh
• Oil
  • Production: 400,000 bbl/day
  • Consumption: 230,000 bbl/day
  • Proved reserves: 2.5 billion bbl
• Natural gas
  • Production: 6.342 billion cu m
  • Consumption: 6.342 billion cu m
  • Exports: 0 cu m
  • Imports: 0 cu m
  • Proved reserves: 192.6 billion cu m
• Current account balance: $1.029 billion
• Exports:
  • Total; $39.92 billion f.o.b.
  • Commodities:
    • Crude oil
    • Marine products
    • Rice
    • Coffee
    • Rubber
    • Tea
    • Garments
    • Shoes
  • Partners:
    • US 18.3%
    • Japan 13.6%
    • China 9%
    • Australia 7.9%
    • Singapore 5.6%
• Imports:
• Total: $39.16 billion f.o.b.
• Commodities:
  • Machinery and equipment
  • Petroleum products
  • Fertilizer
  • Steel products
  • Raw cotton
  • Grain
  • Cement
  • Motorcycles
• Partners:
  • China 15.6%
  • Singapore 12.4%
  • Taiwan 11.7%
  • Japan 11.1%
  • South Korea 9.7%
  • Thailand 6.5%
• Reserves of foreign exchange and gold: $11.92 billion
• Debt - external: $21.86 billion
• Economic aid - recipient: $2.8 billion in credits and grants pledged by the 2006 Consultative Group meeting in Hanoi
• Currency (code): dong (VND)