Tech, Talent and Trump Pose Risks to Vietnam’s Economic Strategy

Picture: East Asia Forum

In an article by East Asia Forum, David Dapice discusses how Vietnam's economic growth faces challenges due to a diminishing supply of young workers, potential trade restrictions under U.S. President-elect Donald Trump, and insufficient investment in critical technological infrastructure, particularly in artificial intelligence.

The World Bank and International Monetary Fund forecast continued growth of around 6 per cent in 2025, as many US-bound exports have shifted from China to Southeast Asia where Vietnam remains a major beneficiary. The country has a 4 per cent inflation rate and low debt, a trade surplus and continuing inflows of foreign direct investment (FDI). But newly registered FDI grew only 1–2 per cent in 2024, falling in real terms.

Vietnam’s ability to move more than a million workers a year from farms to factories and other urban jobs — and in doing so, boost worker productivity and GDP growth — is diminishing. With fewer young workers to do assembly jobs, the low value-added model of Vietnam’s exports is approaching its limits. From 2018 to 2019, manufacturing jobs grew by 1.3 million but from 2022 to 2023, they grew by only 0.2 million. The result was that GDP growth fell from 7.4 per cent in 2019 to 5 per cent in 2023.

A further complication facing Vietnam’s economy comes from US President-elect Donald Trump. He is a fan of tariffs and dislikes getting ‘ripped off’ when US imports exceed exports to a particular country. The US Census reports that the trade deficit with Vietnam amounts to US$10 billion a month in 2024. Even worse, a lot of those exports include imported inputs from China which were lightly processed to avoid tariffs on direct Chinese exports to the United States.