Vietnam’s demographic decline narrows development pathway
Vietnam’s leadership has announced double-digit GDP target growth rates. But a combination of a weak private sector, geopolitical tensions hampering export-oriented growth and climate change are presenting challenges — while the prospect of boosting fertility above replacement level to reverse slowing labour force growth is even less promising.
If a country cannot replace its population, it must import people, increase its fertility rate, decrease its mortality rate or deal with a declining and ageing population. Most developed countries already have low mortality rates and fertility rates below the replacement level of 2.1 — the average number of children born per woman to maintain a stable population level. Since some children die or do not reproduce as adults, a bit more than two children are needed per woman to maintain a population in the long term, if net migration is zero.
Rich countries lack the new births sufficient for replacement. But they have more resources to deal with declining populations. Poorer countries are also joining the ranks of those with low fertility and relatively low mortality, but have more trouble importing large numbers of people and have fewer resources to care for ageing cohorts. Japan, South Korea, Taiwan and Singapore are all high-income and face a surplus of native-born deaths over births. Many middle-income countries, including China, already have low fertility and declining populations.
Thailand’s fertility rate fell below 2.1 in 1991 and has been declining irregularly since then to 1.2 in 2023, according to World Bank data. Its workforce has grown little in the last decade and started falling in 2022. It faces the prospect of growing old before getting rich. Its GDP growth averaged less than 2 per cent a year from 2015 to 2024. While some of those aged over 65 do work, this offers only a modest offset. About a quarter of Thais aged over 65 are in the labour force and this has changed little since 2015.
In nominal terms, Vietnam is nearly a third of the way to reaching high-income status. Its gross national income per capita is just US$4490. Yet its fertility rate is 1.9, below replacement level. Unlike Thailand, Vietnam’s fertility rate has been stable and close to 2.0 since 2000. After 2050, its labour force is projected to fall. By 2060, it may be 3.6 million or 5 per cent less than in 2050.
Vietnam’s projected labour force will grow slowly for several decades due to the impact of younger cohorts being larger than older ones — a phenomenon called ‘demographic momentum’. Graphing the five-year age groups in a population pyramid reveals that many of Vietnam’s youngest generations are about equal to the larger cohort in their 30s and early 40s.
As Vietnam approaches the mid-century, its workforce will be at or close to its peak. If Vietnam’s GDP can grow at a plausible 5–6 per cent per capita during this period of slow growth in the workforce, it should reach high-income status before its labour force and population peak.
Even with a 5–6 per cent annual per capita growth rate, income per capita could approach China’s 2025 levels in the 2040s. Since Vietnam’s population growth rate is now below 1 per cent and falling, this requires annual GDP growth of 5.5–6.5 per cent over the next few decades. If this were realised, Vietnam would be gently ageing while at or close to the World Bank definition of ‘high-income’ status — about US$14,000 annual per capita income in current prices.
General Secretary To Lam is trying to address the internal and external problems facing Vietnam’s growth outlook. These are reflected in a variety of Party resolutions which could support continued economic growth if carried out well.
Various schemes in other countries to give tax breaks or bonuses to families that have children have not worked well and have been very expensive. Scandinavian countries with extensive social benefits have a total fertility rate of about 1.5 and France with free pre-school from age 3 does little better. While making education and housing affordable and subsidising childcare may be desirable, they do not ensure high fertility. Very few high or even upper-middle income countries have a total fertility rate above 2.1.
As women become more educated and work outside the home, the opportunity cost of raising children increases. As income per capita grows, more investment in education is needed for each child to give them good options. Social welfare schemes reduce the need for children to help parents as they age. Children also become less useful in providing labour for economic production. As incomes and urbanisation grow, and as more women work outside the home, fertility in general tends to decline in relatively lower-income countries, such as India.
There must be significant social changes to reach replacement-level fertility. If men are willing to participate more actively in child rearing and domestic chores, if society supports such arrangements and provides flexibility to parents and if businesses allow parents to progress in a career while also having children, it is more likely that fertility rates will increase. Countries like China and Vietnam should not leave it too late to promote similar changes as low fertility becomes a concern of increasing importance.
By David Dapice – DOI Foundation / Eastasiaforum.org – August 20, 2025