2023 and expectations of overcoming 'headwinds'

In 2005, I entered university. At that time, mobile phones were a luxury item, only students from well-off families could have their parents buy them a Nokia “brick”. All communication with family was through the landlord’s landline, so only calls were made when absolutely necessary. Phone calls were charged per minute at the rate set by the landlord. But then, after each summer, many students were able to buy phones, not just Nokia “brick” phones but also phones with music playback and photography functions...

18 years have passed, although I graduated, started working and had the means to buy and use many different phones, I still remember my first phone, with a black and white screen, unmarked keys and the only game was Snake. Now telling this story, my daughter seems not to believe it. Children now have early access to technology. Computers and smartphones have become practical everyday items, effectively assisting in studying and entertainment. My parents in the countryside, now every time they call their children and grandchildren, they only use Facebook and Zalo because it is free, and video calls are much more vivid.

Telling a personal story to see that, over the past two decades, my family, like millions of households in Vietnam, has experienced such a "communication revolution". In our country, to reflect the improvement in living standards, perhaps the coverage of mobile phone subscribers deserves to be one of the criteria included in the evaluation reference system. According to data from the Department of Telecommunications (Ministry of Information and Communications), by March 2022, the total number of smartphone subscribers in Vietnam was 93.5 million. Up to now, this number will certainly not stop there. In 2023, the General Department of Population (Ministry of Health) predicts that our country will welcome its 100 millionth citizen. Thus, if calculated on average, smartphones have almost covered the entire population.

On average, smartphones have almost covered the entire population. Illustration: Internet

The "communication revolution" of nearly one hundred million Vietnamese people, or more broadly, the improvement in people's living standards, has been achieved in the context of 37 years of renovation, when Vietnam's economy has continuously achieved quite impressive growth rates.

If in the early stages of renovation (1986 - 1990), the average annual GDP growth rate was only 4.4%, then in the period 1991 - 1995, the average GDP reached 8.2%/year; the following periods all had quite high growth rates; the period 2016 - 2019 reached an average of 6.8%. Although in 2020, the economy was heavily affected by the Covid-19 pandemic, Vietnam's GDP growth rate was still among the highest growth countries in the region and the world.

The scale of the economy has been raised, in 1989 it only reached 6.3 billion USD/year, then by 2022 - a year considered to be explosive, it increased by 8.02%, the highest in more than 10 years, bringing the scale of our country's economy to surpass the 400 billion USD mark for the first time, reaching about 409 billion USD, ranking 5th in ASEAN and 14th in Asia.

The high and continuous economic growth for decades has significantly improved the lives and living habits of people in every corner. In 1985, the average income per capita was only 159 USD/year, but by 2022 it is estimated to reach 4,110 USD. Nghe An, where I live, also witnessed impressive growth in 2022, reaching 9.08%; bringing the economic scale to 175,740 billion VND (about 7.4 billion USD), ranking 10th in the country, up 2 places compared to 2021.

Recently, I read an article in Forbes - a famous American business magazine: "Vietnam's GDP per capita: A complete analysis". Andrew DePietro - a financial journalist said: Vietnam's per capita income growth is largely due to the increasingly diversified and mature Vietnamese economy. Over the past 20 years, Vietnam's economy has increased its level of maturity, rising from 83rd to 61st in the world on the Economic Complexity Index (ECI). Vietnam's economic maturity ranking is much better than that of neighboring countries, such as Cambodia (ECI ranking is 102) or Laos (ECI ranking is 104). In 2017, Vietnam's economic maturity surpassed Indonesia's and has maintained the "top" position since then.

According to the World Bank (WB), Vietnam is a development success story. Economic reforms since 1986 combined with favorable global trends have rapidly helped Vietnam develop from one of the poorest countries in the world to a lower middle-income country in just one generation.

GDP per capita is the ratio of gross domestic product divided by population. Although it is not a perfect measure of the actual income of people in each country, it is a basic measure to evaluate the growth of the economy, associated with the increase in the living standards of people, used by the world alongside other measures such as: Physical Quality of Life Index; Human Development Index; Basic Needs approach.

Vietnam's growth story brings economic benefits, of which the most obvious manifestation is the continuous increase in GDP per capita recognized by the world. However, to become a high-income country (GDP per capita of about 12,000 USD/year) is still a long way off, requiring us to maintain a high and sustainable growth rate for many consecutive years. The road ahead will still have many challenges, especially in 2023, there are "headwinds" affecting the economy of the whole country, including Nghe An.

The biggest risk is that the main drivers of global growth are weakening. According to the warning of the Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva, the reason is that major economies including the US, Europe, and China - the main drivers of growth - are all slowing down. This is not a macro story happening somewhere in the world, but on the contrary, it is directly affecting the meals of many families.

In Nghe An alone, in the last days of 2022, which is also the time close to the Lunar New Year of Quy Mao 2023, more than 1,000 workers had their contracts terminated because the factory had no export orders. The director of a life insurance office in Hoang Mai town also shared with me his worries when the office's sales dropped by more than 50%. He said: When people are having to worry about spending on other issues in life, it is difficult for them to think about buying life insurance!

A corner of Vinh city center today. Photo: Thanh Duy

Obviously, the Vietnamese economy in general, and Nghe An in particular, are facing many difficulties, so it is not easy to maintain the high growth momentum as in 2022. However, the more difficult it is, the more we need to effectively utilize every growth potential, especially in disbursing public investment capital and reforming administrative procedures, especially in investment and business.

The first days of 2023 have begun, reviewing the achievements of the country in general, Nghe An in particular under the GDP lens to gain more motivation and hope in the new Spring. There, the position, momentum and experiences of overcoming the "headwinds" of the economy that we have accumulated over 37 years of Doi Moi continue to be the foundation and driving force for 2023 and the following years on the path to realizing the aspiration for prosperity and strength of the nation, the "Lam River miracle" of Nghe An. That path does not belong to anyone alone, but we all need to take responsibility to shoulder it...