Vietnam’s growth boom masks labor strains and reform pressures

Vietnam’s economy closed 2025 with 8.46 percent growth in the fourth quarter, capping a year in which output accelerated from 7.05 percent in the first quarter to 8.16 percent in the second and 8.25 percent in the third. The numbers underscore how fast the country is still expanding, but they also sit alongside rising strain in factories, on shop floors and inside the policy apparatus that has relied on exports to drive growth.

The World Bank forecast in March 2025 that Vietnam’s GDP growth would moderate to 6.8 percent in 2025 and 6.5 percent in 2026, even as some assessments later pointed to a stronger-than-expected first half and projected exports to rise 13.4 percent and imports 14.9 percent in 2025. The International Monetary Fund said Vietnam’s export-led model faced significant new challenges from a more adverse and uncertain global trade environment, a warning that comes as the country tries to protect momentum after 7.1 percent growth in 2024.

The labor market is showing where the pressure lands first. IMF analysis has identified skill mismatches and shortages of vocational skills as major barriers to higher productivity, leaving many employers unable to find workers with the training needed for more advanced manufacturing. Vietnamese media has also described growing anxiety among workers despite strong growth, including layoffs, low morale and insecurity about job prospects, with nearly half of surveyed workers feeling more burdened.

Policymakers have responded with a push to shift the economy toward private-sector-led development. In May 2025, the Communist Party of Vietnam Politburo adopted Resolution 68 under General Secretary To Lam, a dramatic policy shift meant to strengthen private enterprise at a time when the state is also carrying out major institutional restructuring and planning higher public investment to support medium-term growth.

The longer-term strategy is even more ambitious. The economic plan approved by the 2021 Party Congress calls for steering foreign investment toward higher-tech industries and stricter environmental standards, while Vietnam continues to aim for high-income status by 2045. That target now sits under pressure from U.S.-China trade tensions, aging demographics, climate risk, infrastructure bottlenecks, pollution concerns and rising domestic costs that many workers say are eroding the gains from export manufacturing.