L'export to Vietnam for Italian companies represents a significant opportunity in a fast-growing economic environment. Vietnam's gross domestic product (GDP) increased by 7.09% in 2024 from the previous year, exceeding the 6.5% target set by the National Assembly, according to data from the Vietnam General Statistics Office reported by Vietnam News.
The total estimated GDP for 2024 is over USD 476 billion, with a GDP per capita of USD 4,700. The average consumer price index is increased by 3.6% compared to 2023while core inflation increased by an average of 2.7%. Foreign direct investment in 2024 reached its highest level since 2020, exceeding USD 25 billionwith an increase of 9.4% over the previous year.
The main sectors that contributed to this growth were services and industry, followed by agriculture, forestry and fishing. This progress occurred despite several natural disasters, including Typhoon Yagi in September 2024, which not only claimed more than 300 lives but also caused at least USD 3 billion in damage.
The World Bank predicts that in 2025 the Vietnam will register the fastest growing economy among all developing economies in East Asia. This forecast, which positions Vietnam above its regional neighbours, highlights theimpressive progress of the countrysupported by structural reforms, a booming manufacturing sector and a business strategy geared towardsinternationalization.
After a past of modest economic performance, overshadowed by the big Asian giants, Vietnam has established itself as one of the most dynamic emerging markets globally. Since 2010, it has been ranked among the middle-income countries, with the ambitious goal of becoming an industrialised country by 2030.
Vietnam's economic growth has been vigorous over the past decade: almost 7% per year in 2015-19, 3% in 2020 and even 8% in 2022. According to World Bank forecasts, Vietnam's economic growth could reach 6.5% in 2025compared to a regional average of 4.5% for other developing economies in East Asia. This figure not only testifies to Vietnam's resilience in the face of global challenges, but also demonstrates its ability to reposition itself in global supply chainsespecially in the context of trade tensions between the great powers.
Over the past decade, Vietnam has established itself as an important industrial hub in the region, attracting substantial foreign direct investment (FDI) in key sectors such as electronics, textiles and automotive. Recently, the country has further consolidated its position by diversifying its trading partners and exploiting free trade agreements with theEuropean Union, the United States and other economic blocks.
The country is one of the main gateways to the South-East Asian markets, arousing great interest among Italian SMEs that see Hanoi as the ideal platform to expand into the ASEAN market.
Several factors explain Vietnam's strong economic growth. In particular, the manufacturing sector Vietnam, already a pillar of the economy, continues to develop at a fast pace. The country is benefiting from the relocation of companies, particularly Chinese ones, seeking to diversify their production bases due to the trade tensions between China and the US. Secondly, Vietnam is investing heavily in modernising its infrastructure to support industrial expansion.
The manufacturing sector, supported by strong inflows of foreign investment attracted by local incentives and the availability of young, skilled and cheap labour, is the country's growth engine. The industrial structure is constituted at 96% by SMEdynamic and determined to acquire advanced products, machinery, technology and management models in order to enter the highest value-added international production chains. The benefits of free trade agreements, such as ASEAN, CPTPP and RCEPfurther boost Vietnam's profile as a manufacturing hub.
This growth offers significant opportunities for theexport to Vietnammaking the country an attractive market for global companies seeking to expand their presence in Asia.
In recent decades, Vietnam has made considerable progress through targeted economic reforms. After the end of the Vietnam War in 1975 and the US trade embargo until 1994, the market reforms of the 1980s have attracted foreign investmenti and increased exports. ASEAN membership in 1995 and WTO membership in 2007, together with the 'global strategic partnership' with the US in 2023, have strengthened the country's international relations.
Economic reforms have taken Vietnam from one of the world's poorest nations to a middle-income economy within a few decades. Now, with the cyclical recovery underway, favourable demographics and the imminent transition to emerging market (ME) status, the country seems poised for another major step in its transformation.
With confidence in China declining due to rising labour costs and an uncertain economic outlook, Vietnam is in pole position for attracting producers who want to reduce their exposure to Beijing.
Foreign Direct Investment (FDI) in Vietnam reached USD 2.8 billion in the first two months of the year, an increase of 9.8% over 2023. Singapore, Hong Kong and Japan are the main sources of investment, with Samsung as the largest foreign investor.
The country has a well-balanced economy, with a current account and trade surplus. The 2023 debt-to-GDP ratio is moderate at 37%. Demographics continue to support growth, with an expanding middle class expected to exceed 75 million by 2030.
The Ho Chi Minh City Stock Exchange (HoSE) is currently classified as a frontier market, but Vietnam is trying to get the emerging market statuswhich could generate net foreign inflows of USD 30 billion by 2030.
Investor interest in Vietnam is set to increase due to the Korea Exchange's (KRX) new technology system that will improve stock market liquidity. This strengthening is one of the reasons why theexport to Vietnam is becoming increasingly relevant, positioning the country as a focal point for Italian companies wishing to expand their business beyond national borders.
Vietnam is emerging as a major technology hub due to the availability of highly skilled programmers at competitive costs. Indeed, global technology companies are increasingly recognising the nation's potential, investing in infrastructure and human resources to exploit local talent. The presence of programmers costing about 90% less than those in the US and 15% less than those in India makes Vietnam a very attractive option for IT outsourcing.
According to thelatest Kearney Global Services Location indexVietnam is classified as Lhe world's seventh most attractive location for IT outsourcing. This recognition underlines Vietnam's growing importance as a technology centre, pushing the country to continue to qualify its workforce to meet global demand.
The entry into force of the EVFTA (European Vietnam Free Trade Agreement) in August 2020 eliminated customs duties and red tape, facilitating trade in key goods such as electronics, foof&beverage products and pharmaceuticals, and greatly opening the Vietnamese market to exports of EU services, such as transport and telecommunications. This represents a significant advantage for theexport to Vietnamallowing European companies to access a fast-growing market with fewer trade barriers.
As mentioned earlier, Vietnam is also investing heavily in infrastructure improvements, recognising that this increases the country's competitiveness. With investments amounting to 5.7% of GDP, Vietnam leads the region in terms of infrastructure spending, with tax incentives for railways and solar energy a sign of a growing focus on renewable energies.
Vietnam's rapid demographic and social change is another element of interest. The population has exceeded 99 million and is expected to reach 120 million by 2050. With 70% of the population under the age of 35, the middle class, currently 13% of the population, is expected to reach 26% by 2026 (Source: Export.gov.co.uk). This demographic development further expands the opportunities for exports, thanks to an increasingly broad and diverse consumer base.
Vietnam represents a strategic partner for Italy in South-East Asiawhile Italy ranks as Vietnam's second largest trading partner in the European Union. In recent years, trade between the two countries has been growing steadily, with significant increases in 2021 and 2022. Italy mainly exports leather, industrial machinery, textiles and clothing in Vietnam, which in turn exports telephones, electronics and fish products to Italy.
Benefiting from the EVFTA agreement, cooperation between the two countries is facilitated, prompting Vietnamese companies to modernise their production processes with top Italian technologies. The "Made in Italy"is seen in Vietnam as synonymous with quality and innovation, opening up further opportunities for Italian products.
The agreement also promotes the sustainable development and environmental protectionsectors where Italian products can have a significant impact, especially in the food sector. A scenario is therefore envisaged in which trade relations between Italy and Vietnam will continue to strengthen, with mutual benefits.
Octagona, a leader in theinternationalization of companiesis ready to support companies from all sectors eager to expand their market in Vietnam and other South East Asian countries. Contact us for more information on how to seize these growth opportunities.
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