The US Council on Competitiveness says Vietnam will join economic leaders China, India and Brazil among the 10 most competitive economies five years from now, based on data from 550 corporate leaders.
Vietnam is forecast to move from 18th to 10th and surpass Indonesia, Malaysia, and Thailand — while the US, Japan and Germany will face a fierce challenge to maintain their competitiveness. Within a decade, 10 Asian economies will be among the world’s 15 most competitive.
One reason Vietnam will be a leader among them is that the country appears to be emerging from five years of economic instability. The government has taken a series of sometimes-contradictory measures to deal with inflation, bankruptcies and a commercial banking system that nearly collapsed under bad debts.
Now the economy is slowly recovering as inflation has been tamed somewhat and export revenue surged 18% last year to $115 billion.
Vietnam’s challenge for this year is to stop a vicious cycle of falling purchasing power, rising inventory, falling production, rising bad debt, and declining credit — at the same time the fragile global economy offers a weakening market for Vietnam’s exports.
The government hopes to get inflation below 8% along with 5.5% economic growth this year by (1) reducing inventory, (2) tackling bad debts and (3) improving the real estate market.
The Council on Competitiveness report appears to anticipate Vietnam’s measures will be successful in the long run.