Vietnam needs productivity-led growth to reach 2045 income goal, official says

Vietnam cannot achieve its goal of becoming a high-income economy by 2045 by relying on workforce expansion and capital accumulation, World Bank official Mariam J. Sherman told the U.K.-Vietnam Business Forum in Ho Chi Minh City on Oct. 29. She said productivity and better-quality employment must drive the next stage of growth.

Sherman, the bank’s country director for Vietnam, Cambodia and Laos, said Vietnam’s economic gains had been supported by trade liberalisation, foreign investment and workers moving from agriculture into manufacturing. GDP per capita has risen sixfold to more than US$5,000, but the country’s established growth drivers are approaching their limits, she said.

She pointed to demographic pressures: the working-age population reached its peak in 2014, while people over 65 are projected to account for 14% of the population by 2035, double their earlier share. Foreign-invested businesses generate 73% of exports, she said, but their connections with domestic firms remain weak.

The World Bank’s priorities include raising job quality and addressing skills shortages, especially in digital and technical work. Sherman said artificial intelligence made it increasingly urgent for education and training to match employers’ needs.

The bank also called for stronger links between regions, markets and people. It estimates that transport and energy infrastructure upgrades will require about US$400 billion, amid high logistics costs and strains on electricity supplies.

Climate action and institutional changes complete the bank’s priorities. Without sufficient action, climate change could cut GDP by 12.5% by 2050, while a well-designed decarbonisation strategy could lift GDP by nearly 3% by 2040, according to the bank. Sherman also urged the government to focus more on enabling and regulating economic activity rather than directly planning and producing.