Economy
Economy—overview: Vietnam is a poor, densely populated country that has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally planned economy. Substantial progress has been achieved over the past 10 years in moving forward from an extremely low starting point, though the regional downturn is now limiting that progress. GDP growth of 8.5% in 1997 fell to 4% in 1998. These numbers masked some major difficulties that are emerging in economic performance. Many domestic industries, including coal, cement, steel, and paper, have reported large stockpiles of inventory and tough competition from more efficient foreign producers, giving Vietnam a trade deficit of $3.3 billion in 1997. While disbursements of aid and foreign direct investment have risen, they are not large enough to finance the rapid increase in imports; and it is widely believed that Vietnam may be using short-term trade credits to bridge the gap—a risky strategy that could result in a foreign exchange crunch. Meanwhile, Vietnamese authorities continue to move slowly toward implementing the structural reforms needed to revitalize the economy and produce more competitive, export-driven industries. Privatization of state enterprises remains bogged down in political controversy, while the country's dynamic private sector is denied both financing and access to markets. Reform of the banking sector is proceeding slowly, raising concerns that the country will be unable to tap sufficient domestic savings to maintain current high levels of growth. Administrative and legal barriers are also causing costly delays for foreign investors and are raising similar doubts about Vietnam's ability to maintain the inflow of foreign capital. Ideological bias in favor of state intervention and control of the economy is slowing progress toward a more liberalized investment environment.
GDP: purchasing power parity—$134.8 billion (1998 est.)
GDP—real growth rate: 4% (1998 est.)
GDP—per capita: purchasing power parity?$1,770 (1998 est.)
GDP—composition by sector: agriculture: 28% industry: 30% services: 42% (1996 est.)
Population below poverty line: 50.9% (1993 est.)
Household income or consumption by percentage share: lowest 10%: 3.5% highest 10%: 29% (1993)
Inflation rate (consumer prices): 9% (1998)
Labor force: 32.7 million