Vietnam’s National Assembly has officially approved a GDP growth target for the country for the year of 8 percent. If achieved, this would be the fastest GDP growth the country has seen this century, aside from 2022, in which it reached 8.01 percent (Notably, this was off the back of a low base on account of COVID-19 border closures and lockdowns in 2021).
This is not, however, what makes this target unusual but rather the fact that GDP growth targets are set at all. Indeed, in most of the world, governments tend to structure their economic policy around a target range for inflation with an independent (in an ideal world) central bank empowered to make decisions to ensure that inflation stays within said range. This is usually done by raising or lowering interest rates which then goes on to either stimulate or hamper growth. In this context, GDP growth is an outcome and an indicator of an economy’s health as opposed to a target that can necessarily be reached.
In Vietnam, however, it’s a little bit different.
Instead of focusing on inflation, usually a whole host of different targets are set at the start of the year, among them GDP growth. This is covered in the local press, in terms of buzz, much the same way as a growth forecast, but should not be confused with a growth forecast in that it is only loosely underpinned by economic data, if at all. That is to say, these targets don’t really amount to much in terms of an economic outlook or guidance.
But that is not to say they don’t have value.
Targets can be an effective motivational tool and a catalyst for change. For example, in 2023, the recovery of Vietnam’s tourism industry was slow with the country trailing its regional peers in its pursuit of the same numbers it was pulling, in terms of tourist arrivals, before the pandemic. In response, the length of the visas available was extended and the number of nationalities allowed to enter Vietnam visa-free was expanded. Subsequently, tourism numbers in 2024 came in just half a million shy of the 18 million they had reached in 2019.
On this line of thought, there is plenty of bureaucratic red tape in the Vietnamese economy that could be cut and result in some significant growth.
Mining, for example, makes up just 2.28 percent of Vietnam’s real GDP, yet Vietnam has vast natural resources with some of the biggest rare earth reserves in the world and huge natural gas reservoirs pockmarking its coast. These have, however, been largely undeveloped as mining firms await approvals and struggle to negotiate with the various local stakeholders.
Creative industries too, accounted for just .076 percent of Vietnam’s real GDP in 2024. This contrasts with creative industries accounting for about 3.1 percent of global GDP. A contrast in large part driven by bureaucracy that requires arts projects to be approved by government officials which can cause significant delays and see these projects abandoned altogether due to censorship in some instances.
The point being if the desire to reach a GDP growth rate of 8 percent sees unnecessary bureaucracy dismantled and faster project approvals, this could be a good thing.
That said, it also comes with risks. Tearing through unnecessary administrative red-tape is all well and good, however, there are risks that this can see important regulations cut through too, regulations designed to protect people and the environment, for example. Moreover, speed and quality do not always go hand-in-hand and this could pose risks to the integrity of new projects in both a moral (read: rent-seeking) and a physical (read: poor construction) sense.
That said, just how much pressure these targets put on the key actors involved is debatable. It’s not unusual for Vietnam to fail to reach the targets it sets, which is more often than not written off as due to externalities beyond the country’s control. And to be fair, this is usually true. In January of 2020, it was difficult to imagine just how dire the situation could get with respect to the pandemic, moreover, in January of 2022, only a few very astute observers could have foreseen Russia’s invasion of the Ukraine and the subsequent fuel crisis.
That said, it was foreseeable in November of last year, when Donald Trump was elected President of the United States, that 2025 was going to be a volatile year for the world economy, particularly countries that depend heavily on trade with the US, like Vietnam.
The point being that as great as an 8 percent GDP growth target sounds, it probably shouldn’t take pride of place in investment decision-making and, in the current global context, should probably be seen more as aspirational rather than necessarily achievable.