The 1997 Asian financial crisis highlighted the problems in the Vietnamese economy and temporarily allowed opponents of reform to slow progress towards a market-oriented economy. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999. Growth then rose to 7% in 2000-05 even against the background of a global recession. Since 2001, however, Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive, export-driven industries. However, equitization of state-owned enterprises and reduction in the proportion of non-performing loans has fallen behind schedule. Vietnam's membership in the ASEAN Free Trade Area (AFTA) and entry into force of the US-Vietnam Bilateral Trade Agreement in December 2001 have led to even more rapid changes in Vietnam's trade and economic regime.

Vietnam's exports to the US doubled in 2002 and again in 2003. Vietnam became a member of the WTO in 2005. Among other benefits, accession allows Vietnam to take advantage of the phasing out of the Agreement on Textiles and Clothing, which eliminated quotas on textiles and clothing for WTO partners on 1 January 2005. Vietnam is working to promote job creation to keep up with the country's high population growth rate. However, high levels of inflation have prompted Vietnamese authorities to tighten monetary and fiscal policies.

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Information courtesy of VietVentures - www.vietventures.com

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