Hanoi and HCMC drive the growth of Vietnam

Before I jump into the meat of it, I wanted to point to this kickstarter for the families of the 39 trafficked Vietnamese that died in the UK. The money goes to the families, who likely face money issues after losing a breadwinner and potentially having to pay off the debt owed to the traffickers. Support has been forthcoming: the organizers have already upped the goal from $16,000 to $40,000 to $60,000.

In other news, the Ho Chi Minh City party executive committee estimates that growth for the city will be 8.32% in 2019. To put this in perspective, the IMF said in July that the country would grow around 6.5%. If so, if it does reach this 8.3%, that means the rest of the country is growing just 6%.

Added to that, HCMC is currently contributing 27% of the national budget. It’s GDP makes up just 21% or so of the country. And this stat is crazy:

Source: Vietecon.com

For this year, its [HCMC’s] target of VND400 trillion ($17.29 billion) was 1.1 times higher than those of the remaining four federal municipalities, Hanoi, Hai Phong, Da Nang and Can Tho, put together, which is only VND365.9 trillion..

Hanoi is also growing quickly. The government aimed for 7.4-7.6% growth in 2019, and as of 9M2019, it had grown 7.35%.

If Hanoi grows 7.5% and HCMC 8.3%, then the rest of the country will grow 5.7%. The difference between HCMC’s 8.3% and the rest of the country’s 5.7% growth speaks to the continued divergence between the city and the countryside.

The difference is already quite wide. These two cities officially account for about 18% of Vietnam’s population (although true population figures are likely higher than this), yet they make up 35% of GDP. By my calculations (and they very well could be wrong but are probably in the magnitude), GDP per capita in HCMC will be over $6,000, while Hanoi is at $4,400 and the rest of the country at $2,600.

We are increasingly seeing a rural/urban economic divide. While it has always been there, I am worried that it is getting worse. It will ultimately mean that more people flood into the cities, but that will likely leave rural areas even poorer.