2023 and the expectation of overcoming the 'headwind'

In 2005, I entered university. At that time, mobile phones were a luxury item; only students from well-off families could afford a basic Nokia phone. All communication with family was through the landlord's landline, so calls were only made when absolutely necessary. Phone calls were charged per minute according to the landlord's rate. Yet, suddenly, after each summer, I saw more and more of my friends buying phones, not just basic Nokias, but all sorts of phones with music playback and camera functions...

Eighteen years have passed, and even though I graduated, started working, and have the means to buy and use many different phones, I still vividly remember my first phone, with its black and white screen, no accented buttons, and the only game it played: Snake. Now, when I tell this story, my daughter seems to disbelieve it. Children nowadays have early access to technology. Computers and smartphones have become practical everyday tools, greatly assisting in learning and entertainment. My parents in the countryside now only call their children and grandchildren through Facebook or Zalo because it's free and offers much more engaging video calls.

Let me share a personal story to illustrate that, over the past two decades, my family, like millions of other households in Vietnam, has experienced a "communication revolution." In our country, to reflect the improvement in living standards, the coverage of mobile phone subscriptions should be considered one of the criteria for evaluation. According to data from the Telecommunications Department (Ministry of Information and Communications), as of March 2022, the total number of smartphone subscribers in Vietnam was 93.5 million. This number is likely to continue growing. In 2023, the General Department of Population (Ministry of Health) predicted that Vietnam would welcome its 100 millionth citizen. Therefore, on average, smartphones have almost covered the entire population.

On average, smartphones have virtually covered the entire population. (Illustration: Internet)

The "communication revolution" for nearly 100 million Vietnamese people, or more broadly, the improvement in people's living standards, has been achieved in the context of 37 years of reform, during which Vietnam's economy has consistently achieved impressive growth rates.

While the average annual GDP growth rate was only 4.4% during the early stages of reform (1986-1990), it reached 8.2% per year during the period of 1991-1995; subsequent periods also saw relatively high growth rates; and the average growth rate for the period of 2016-2019 reached 6.8%. Despite the severe impact of the Covid-19 pandemic on the economy in 2020, Vietnam's GDP growth rate remained among the highest in the region and the world.

The size of the economy has increased significantly. In 1989, it was only $6.3 billion per year, but by 2022 – a year considered explosive, with a growth rate of 8.02%, the highest in over 10 years – the size of our economy surpassed the $400 billion mark for the first time, reaching approximately $409 billion, ranking 5th in ASEAN and 14th in Asia.

The high and sustained economic growth over several decades has significantly improved the lives and living habits of people in every corner of the country. In 1985, per capita income was only $159 per year, but by 2022 it was estimated to reach $4,110. Nghe An, where I live, also witnessed impressive growth in 2022, reaching 9.08%; bringing the size of the economy to VND 175,740 billion (approximately $7.4 billion), ranking 10th nationwide, an increase of 2 positions compared to 2021.

I recently read an article in Forbes, a renowned American business magazine, titled "Vietnam's GDP Per Cap: A Full Analysis." Andrew DePietro, a financial journalist, argues that Vietnam's growth in per capita income is largely due to its increasingly diversified and sophisticated economy. Over the past 20 years, the Vietnamese economy has improved significantly, rising in the Economic Complex Index (ECI) from 83rd to 61st globally. Vietnam's economic sophistication ranking is much higher than that of its neighbors, such as Cambodia (ECI ranking 102nd) or Laos (ECI ranking 104th). In 2017, Vietnam's economic sophistication surpassed Indonesia and has maintained its leading position ever since.

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

GDP per capita is the ratio of gross domestic product to population. While not a perfect measure of real income levels in each country, it is a fundamental indicator of economic growth and, consequently, improved living standards. It is used globally alongside other measures such as the Physical Quality of Life Index, the Human Development Index, and the Basic Needs approach.

Vietnam's growth story has brought economic benefits, most notably the continuous increase in GDP per capita, recognized worldwide. However, to become a high-income country (GDP per capita of over US$12,000/year), there is still a considerable distance to go, requiring us to maintain a high and sustained growth rate for many consecutive years. The road ahead will be full of challenges, and in 2023, there are "headwinds" impacting the national economy, including Nghe An province.

The biggest risk is that the main drivers of global growth are weakening. According to a warning from the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, this is because major economies including the US, Europe, and China – the main drivers of growth – are all slowing down. This isn't just a macroeconomic issue happening somewhere in the world; it's directly impacting the dinner tables of many families.

In Nghe An province alone, in the final days of 2022, just before the Lunar New Year of 2023, more than 1,000 workers had their contracts terminated because factories lacked export orders. The director of a life insurance office in Hoang Mai town also shared his concerns with me, noting a more than 50% drop in office sales. He said: "When people are preoccupied with other life expenses, it's difficult for them to even think about buying life insurance!"

A view of the city center of Vinh today. Photo: Thanh Duy

Clearly, the Vietnamese economy in general, and Nghe An province in particular, is facing numerous difficulties, so maintaining the high growth rate seen in 2022 is no easy feat. However, the greater the challenges, the more we must carefully utilize every opportunity for growth, especially in disbursing public investment capital and reforming administrative procedures, particularly those related to investment and business.

As 2023 begins, let's review the achievements of the country in general, and Nghe An in particular, through the lens of GDP to gain more motivation and hope for the new spring. There, the momentum and experience gained from overcoming numerous "adverse winds" in the economy during 37 years of Doi Moi (Renovation) continue to be the foundation and driving force for 2023 and the years to come on the path to realizing the nation's aspiration for prosperity and strength, and Nghe An's "Lam River miracle." That path is not the responsibility of any one person alone; we all have a responsibility to bear…

Thanh Duy