Vietnam has made significant development progress during the past two decades and it has increasingly integrated into the world economy. The government has strong ownership of its development agenda and consistently demonstrates an effective use of international development assistance. Vietnam has reduced poverty at an unprecedented rate: the number of Vietnamese living on less than US$1.25 per day fell from 64 percent in 1992 to 17.2 percent in 2012. Economic growth has slowed in recent years, although GDP continued to grow in 2013, by 5.2 percent, despite weaknesses in the global economy.
Vietnam's success is reflected in markedly improved social circumstances. The country has already met the Millennium Development Goals (MDGs) to eradicate extreme poverty and hunger and to improve maternal health. Vietnam is on track to meet most of the other MDGs, with almost universal access to primary education, health care, and basic services. More efforts, however, are required related to environmental sustainability.
The United Nations Development Programme ranked Vietnam 127 out of 187 countries on its 2012 Human Development Index. In 2012, average annual per-capita income in Vietnam reached US$1,550, moving Vietnam into lower-middle-income country status. Recent economic growth has improved the quality of life for many Vietnamese, but some sectors of the population, particularly the rural poor, ethnic minorities and female-headed households, are not equally benefiting from economic growth. In addition, Vietnam faces ongoing economic instability and a need to reform its financial sector to meet the demands of its evolving economy.
A single party dominates Vietnam's political system. Corruption and excessive regulations and state controls continue to constrain development, while significant concerns remain regarding rights to freedom of expression and association. There are signs, however, of greater government transparency and accountability, especially within the National Assembly, of more participatory citizen consultations and of better public financial management.
Vietnam's transition to a lower-middle-income economy has brought about new challenges and needs. To promote private sector development and facilitate the ease of doing business, there is a need for legal and policy reforms. There is also a need for reforms to ensure the robustness of the banking and public financial system, to better connect public services to the demands of the market and citizens and to combat corruption. Vietnam's ongoing decentralization of its public finance accounts and service delivery highlight the need to strengthen provincial capacities, and a focus on increasing agricultural competitiveness is needed to address sustained poverty reduction in rural areas.