Socialist Republic of Vietnam

Over the past few decades, Vietnam has transformed into a dynamic economy and an attractive market for international investors. Since the end of the Vietnam War and the introduction of economic reforms (Doi Moi) in the 1980s, the country has seen remarkable growth. In the 2010, Vietnam officially achieved lower-middle income status and by 2023, it’s GDP per capita had risen from USD 481 in 1986 to USD 4,346. This economic growth has been inclusive in many aspects.

Vietnam’s economic growth has averaged 5.7% annually over the past six years (2019-2024), driven by international trade and foreign investment. Throughout this period, the country’s export-driven economy demonstrated resilience, even weathering the COVID-19 pandemic with minimal disruption compared to other nations in the region. The recovery has been bolstered by strong foreign direct investment and public infrastructure investment, making Vietnam one of Asia’s most promising growth markets.

Vietnam has made significant progress toward achieving the United Nations’ Sustainable Development Goals (SGDs). The country is on track to meet five key SDGs by 2030, including:

• SDG 1: No poverty;
• SDG 2: Zero hunger;
• SDG 4: Quality education;
• SDG 13: Climate action,
• SDG 17: Partnerships for the goals.

Vietnam has made great strides in reducing poverty. As of 2023, the country’s poverty rate continues to decline. Using the World Bank’s lower-middle income country poverty line (USD 3.65/day in 2017 purchasing power parity), the poverty rate fell to about 3.9%. This marks significant progress compared to 16.8% in 2010. The impact of the COVID-19 pandemic temporarily slowed wage growth and job quality improvements, creating a challenge for further poverty reduction. Vietnam’s poverty outlook remains positive, with poverty rate projected to drop further in the coming years.

Vietnam is most vulnerable to climate change, ranked 16th globally in terms of exposure to disasters and extreme weather. Nearly 60% of its land area are at risk from natural hazards such as floods and storms, which cause the greatest economic damage and loss of life.

In mid-2021, the Vietnamese government introduced a five-year Socio-Economic Development Plan (2021-2025), with priorities including :

• enhancing productivity, efficiency and competitiveness of the economy;
• recovering from the COVID-19 pandemic;
• promoting environmental protection and climate change adaptation; and
• aiming to graduate from lower-middle income country status by 2025 and become a modern industrialized nation.

Agriculture and natural resources remain central to poverty reduction, contributing 16.3% of GDP. Vietnam’s service sector has become the largest contributor to its economy, making 41.2% of GDP, with nearly 37.5% of the workforce employed in this sector. 

The governments of Luxembourg and Vietnam have maintained a strong partnership over the years, despite the closing of the Luxembourg embassy in 2016.  While the last official Indicative Cooperation Programme ended in 2015, ongoing agreements focus on key areas like climate adaptation and resilience, and sustainable finance.