Việt Nam’s economic momentum reflected in new income status

Việt Nam’s economic momentum reflected in new income status

Between 2021 and 2025, Việt Nam’s GNI recorded average annual growth of around 10 per cent, underscoring the economy’s strong momentum.

Exports are one of the key drivers of Việt Nam's economic growth. — VNA/VNS Photo

The World Bank’s decision to classify Việt Nam as an upper-middle-income country after its gross national income (GNI) per capita reached US$4,970 in 2025 stands as a significant milestone in the country’s development journey, reflecting sustained economic progress while also highlighting the need for deeper reforms to achieve high-income status.

Between 2021 and 2025, Việt Nam’s GNI recorded average annual growth of around 10 per cent, underscoring the economy’s strong momentum.

According to the WB, this performance was driven primarily by a robust recovery in exports, which expanded by more than 15 per cent during 2024-25, and by the country’s ability to sustain strong GDP growth of 7 per cent and 8 per cent in two consecutive years.

Lê Duy Bình, an economist and Managing Director of Economica Vietnam, said the WB’s reclassification represents both recognition of Việt Nam’s achievements and a call for more ambitious reforms as the country pursues the high-income status.

A key distinction, he noted, lies in the indicator used by the World Bank. While GDP measures the total value of goods and services within a country’s borders, GNI provides a broader assessment by capturing the income earned by a nation’s citizens and businesses regardless of where that income is generated.

The relationship between the two indicators is reflected in the formula: GNI equals GDP plus net factor income from abroad.

Việt Nam’s GNI surpassing the World Bank threshold of $4,636 per capita therefore suggests that the country is no longer merely a manufacturing base with a GDP of $514.7 billion, but is increasingly capturing a greater share of value within global supply chains.

According to Bình, the achievement reflects nearly two decades of persistent efforts.

Since joining the lower-middle-income group in 2009, Việt Nam has spent 17 years advancing to this new development stage. However, he cautioned that the new classification should not be viewed as an end goal.

Moving into the upper-middle-income group is a stepping stone rather than a destination, he said, stressing that economic expansion alone is insufficient.

Việt Nam must simultaneously strengthen the foundations of long-term growth, including scientific and technological capabilities, innovation capacity, workforce quality, and its position in higher-value segments of global production networks.

The next phase of development will present more complex challenges, requiring fundamental changes in governance and policymaking to avoid the so-called middle-income trap.

Among the challenges are population ageing, rising social welfare demands, inequality and widening income gaps that can accompany rapid growth. At the same time, a larger economy will require greater energy consumption and resource use.

To ensure sustainable development and meet increasingly demanding global standards, Việt Nam will need to accelerate green growth, improve resource efficiency and reduce emissions, he said.

Nguyễn Thị Mai Hạnh, head of the National Accounts Department under the National Statistics Office of the Ministry of Finance, emphasised that the WB’s reclassification is primarily a change in economic categorisation and does not mean Việt Nam has become a developed country or significantly narrowed its income gap with advanced economies.

She noted that labour productivity, innovation capacity and overall economic competitiveness still require substantial improvement in the coming years.

Hanh also stressed that rising income rankings should translate into tangible improvements in people’s living standards rather than remain statistical achievements.

She cited the National Statistics Office as saying that average monthly income of workers reaches nearly VNĐ9 million ($342) in the second quarter of 2026, slightly down by VNĐ53,000 from the previous quarter.

Meanwhile, household survey data showed that more than 96 per cent of households reported stable or higher incomes compared with the same period last year.

Nearly 31 per cent said their incomes have increased, while more than 65 per cent reported no change.

Economists agree that the latest milestone demonstrates Việt Nam’s success in moving beyond the initial stage of economic accumulation.

The next chapter, however, will require a different development model focused on productivity, innovation and sustainability.

The new income classification is also expected to enhance Việt Nam’s international standing. As the country’s economic scale and market size expand, its influence in international economic affairs is likely to grow accordingly.

Experts noted that larger economies generally possess greater negotiating leverage and stronger soft power in trade and economic relations.

This could enable Việt Nam to play a more proactive role in shaping next-generation free trade agreements and securing more favourable terms in international economic negotiations. 

Bizhub