In 2022, the geopolitical tensions caused by the war in Ukraine, slowing growth in the Chinese economy and sharp rises in energy and food prices led to a significantly higher inflationary outlook globally. The following report takes a closer look at the Vietnam market TTC is operating in, reviewing insights, trends and likely areas to watch in 2023.
Vietnam concluded the 2022 calendar year as the best-performing economy in Asia, largely due to its ability to attract foreign investment relocating from China. The World Bank reported that Vietnam is now one of the most dynamic emerging countries in the East Asia region.
According to data from the General Statistics Office, Vietnam’s GDP in the first nine months of 2022 grew by 8.8 percent – the highest nine-month rise in the 2011-2022 period. The possible recessions and economic slowdown in Vietnam’s three major trading partners — the United States, the European Union and China — may however have a serious impact on future growth this year. Export orders dropped significantly at the start of 2023, according to a report by the East Asia Forum. The Asian Development Bank did however suggest that the growth prospect of Vietnam in 2023 is still better than that of most other Southeast Asian countries, predicting GDP growth in 2023 at around 6.3 percent.
On the external front, FDI disbursements grew to US$10 billion in the first half of 2022 — the highest increase in five years. Foreign investments in manufacturing, particularly in electronics, continued to grow rapidly in 2022. Many international companies such as Lego, Samsung, Apple, Google, Intel, and Microsoft either expanded their existing plants in Vietnam or relocated to Vietnam.
Inflation is rising but may still be under 5 percent, in line with the government’s planning. A weakened demand is one reason for the lower forecast. Revenues from retail and services in January was only 88.1 percent of pre-Covid figures, even though it has risen 15.8 percent year-on-year, according to the General Statistics Office. The decline in stocks, bonds, and property prices also dragged down consumption, while high interest rates have encouraged people to save and cut spending (VNexpress.net).
Vietnam’s unemployment rate was 2.32 percent in the Dec 2022 quarter, compared to an all-time high of 3.98 percent in Sep 2021. The labour force (categorised as those aged 15 and older) reached 51.9 million in the third quarter of 2022, an increase of 2.8 million compared to the same period the previous year. Vietnam has a population size similar to the Philippines, at 103.8 million and a median age of 31.8 years. According to research by Gartner, foreign companies in Vietnam have reported that the speed and agility with which Vietnamese employees embrace new training, skill building or competency shifts are impressive relative to other country destinations (specifically, India).
According to Vietnam’s Ministry of Information and Communications, Vietnam’s ICT market had an estimated value of USD 20 billion in 2019, and is expected to grow at 10-15 percent per year between 2021 and 2025 as both the public and private sectors increase adoption of ICT solutions. The government of Vietnam has identified ICT as a major industry and socio-economic growth driver and is urging government agencies at all levels to apply advanced ICT solutions towards the goals of improving operational efficiencies and providing better governance services.
Technology talent in Vietnam is still in-demand, not just locally, but globally as well. With talent considered to be well-educated, hard-working, and having an international outlook. According to the 2022 Vietnam IT Market Report (by TopDev), the country possesses over 480,000 IT software engineers/developers, with universities generating around 57,000 IT graduates annually (software major). Shortages and therefore demand in technology talent are being predicted to continue during the 2023-24 period. The report stated that the shortages are due to Vietnam’s strong reputation in providing quality tech talent; growth in the startup tech sector; and transformation of more traditional business shifting to a digital/e-commerce focus.