An urban city in Vietnam.

Among the 218 economies assessed this year, Vietnam was one of only six to be upgraded to a higher income category by the WB Group. The move marks a notable milestone after 17 years in the lower-middle-income group, where Vietnam had remained since 2009.

Vietnam's recent reclassification by the World Bank (WB) Group as an upper-middle-income economy marks an important milestone in the country’s development trajectory, said Mariam J. Sherman, WB Director for Vietnam, Cambodia, and Lao PDR, noting that while the upgrade reflects Vietnam's remarkable progress, it also brings a new set of growth challenges as the country pursues its ambition of becoming a high-income economy by 2045.

According to the WB Group’s latest annual country income classification, Vietnam's gross national income (GNI) per capita increased from 4,490 USD in 2024 to 4,970 USD in 2025. The figure officially surpasses the new upper-middle-income threshold of 4,636 USD established under the WB's classification system. Among the 218 economies assessed this year, Vietnam was one of only six to be upgraded to a higher income category by the WB Group. The move marks a notable milestone after 17 years in the lower-middle-income group, where Vietnam had remained since 2009.

“It reflects the remarkable transformation Vietnam has achieved through decades of sustained reforms, strong economic growth and rising living standards,” Sherman noted.

Over the past years, Vietnam has consistently been one of the fastest-growing economies in the region, supported by resilient foreign investment, surging exports, and growing domestic services, she said.

According to the WB, Vietnam's average annual GNI growth of 10% during the 2021-2025 period ranks among the strongest and most sustained in the region. The country's robust performance has also been underpinned by a sharp rebound in trade and economic activity. Exports expanded by more than 15% in both 2024 and 2025, while GDP growth reached 7% and 8%, respectively.

This milestone can further help reinforce international confidence in Vietnam's long-term economic prospects and the country’s position as a destination for investment.

She is also cautious that the significance of this upgrade goes well beyond the classification itself. As countries develop, the nature of the growth challenges also changes. The drivers that helped Vietnam reach upper-middle-income status will remain important, but the journey ahead remains a significant one. Based on this year's thresholds, Vietnam's GNI per capita would need to nearly triple to reach high-income status. That helps explain why, since 1990, only 27 economies have successfully transitioned from middle- to high-income status, and more than a third of those benefited from unique circumstances such as accession to the European Union or significant natural resource wealth.

To sustain growth and avoid the middle-income trap, the next chapter will be defined not only by how fast Vietnam grows but also by the quality of that growth, Sherman stressed, adding that sustaining future growth will increasingly depend on productivity, innovation, stronger domestic enterprises, and the ability to generate greater value across the economy.

Turning the 2045 vision into reality will require addressing several important challenges. One is the growing divergence between foreign-invested and domestic firms. According to the WB official, while foreign investment has been a powerful driver of Vietnam's success, the next stage of development will depend on strengthening domestic enterprises, particularly SMEs, so they can innovate, grow, and create more quality jobs while participating more deeply in global value chains. Vietnam also operates in an increasingly uncertain global environment.

As one of the world's most open economies, maintaining resilience to external shocks while continuing to diversify the drivers of growth will become increasingly important.

According to the WB official, public investment is becoming one of key levers for growth, with planned volume for the 2026 - 2030 period nearly triple those of the previous five-year period. But public investment needs to move from faster disbursement to higher impact. This means better project selection, stronger preparation, more efficient procurement, and mechanisms to de-risk and crowd-in private investment. Infrastructure will play a central role in supporting the next stage of development. The Government's ambitious public investment programme can help address critical infrastructure bottlenecks, but public resources alone will not be sufficient to meet Vietnam's long-term infrastructure ambitions.

Sherman said, this is where the WB Group is working with the Government to rethink how infrastructure financing is approached, creating the conditions to mobilise private capital through well-prepared, bankable projects. Together, public and private investment can help deliver the transport, energy, and digital infrastructure needed to sustain future growth.

Long-term growth will also require deeper and more diversified sources of finance beyond the banking system. Continued capital market reforms can help ensure that capital and bank credit flow to the most productive and dynamic firms, including smaller enterprises with the potential to grow. Building on the recent FTSE Russell upgrade, continued reforms can further strengthen Vietnam's capital markets, broaden the investor base, and reinforce the country's position in global financial markets.

At the same time, capable firms need capable people. As Vietnam moves toward high-income status, continued investment in innovation, skills development, and technology adoption will be essential to help businesses move up the value chain, compete in higher value-added activities, and create more and better jobs.

More importantly, she affirmed, better rules are necessary but not sufficient. Vietnam has made meaningful regulatory progress, but sustainable growth ultimately depends on systemic commitment: every level of government, every institution, every stakeholder aligned behind the same direction towards the same goal.

While implementing the required policy reforms will demand sustained effort and navigating significant challenges, the encouraging news is that Vietnam already has many of the essential ingredients in place. The country has a young and talented workforce, macroeconomic stability, a strategic location at the heart of Asia's growth region, and, perhaps most importantly, a strong ambition and demonstrated willingness to reform and adapt. These are advantages that many countries do not have. These will serve as critical foundations for Vietnam as it embarks on the next phase of its development journey toward achieving high-income, developed-country status by 2045, she noted.