Goldman Sachs discusses Vietnam's "10% growth target": A long way to go, facing two major challenges

After the conclusion of the 14th National Congress of the Communist Party of Vietnam on January 23, 2026, Vietnam has set a high "growth target" for the next five-year plan: aiming for an average annual real GDP growth rate of 10% or more from 2026 to 2030. This represents a significant acceleration compared to the past five years' target of 6.5%–7.0% and an actual growth of 6.2% (excluding 2021's 7.2%).

According to the Wind Trading Platform, in the latest macroeconomic research report, Goldman Sachs systematically assessed Vietnam's development goal of achieving "an average annual real GDP growth of over 10%" over the next five years. In Goldman Sachs' view, this goal implies that Vietnam's economic growth trajectory will experience significant acceleration, but sustaining double-digit growth in the medium term still faces dual challenges of structural constraints and execution issues.

Goldman Sachs pointed out that Vietnam's policy blueprint has clearly outlined a path: to drive the economy's transition from factor-driven to a higher value-added model through productivity enhancement, pre-investment, and industrial upgrading.

However, the problem lies in the fact that this path is highly dependent on resource allocation efficiency, institutional execution capability, and the continuous inflow of external funds, making "10% growth" more of an upper limit scenario rather than a steady-state assumption.

Growth Logic: From "Stability Seeking Progress" to "Comprehensive Acceleration"

Goldman Sachs first emphasized that the growth target proposed in Vietnam's latest five-year development plan is essentially a proactive elevation of the past growth pace.

During the past cycle, Vietnam's economy maintained a medium to high-speed expansion overall, but the demand structure did not show significant re-acceleration:

• Private consumption has mostly returned to normal rather than forming a new growth engine;
• The investment side has been constrained by execution pace and confidence factors, performing worse than in earlier stages;
• Fluctuations in the external demand environment have created periodic pressure on export contributions.

Against this backdrop, the government has chosen to "raise the ceiling" through more aggressive investment deployment and structural reforms. Goldman Sachs believes that this line of thinking is inherently reasonable, but its success highly depends on three variables: labor efficiency, investment intensity, and whether total factor productivity (TFP) can significantly improve simultaneously.

The First Major Challenge: Diminishing Labor Dividend and Increasing Productivity Pressure

In terms of growth accounting, Goldman Sachs believes that labor factors are no longer a reliable "pro-cyclical driver."

The research report points out that the growth rate of Vietnam's working-age population has significantly slowed, and the labor participation rate is at a relatively high level, which means that the space for driving growth through "more labor" is extremely limited. Under this realistic constraint, the policy goal has turned to heavily rely on the leap in labor productivity.

According to the plan, Vietnam hopes to raise the average annual growth rate of labor productivity to about 8.5% over the next five years. Goldman Sachs candidly states that this assumption is quite challenging:

• It requires high coordination among education, human capital, and industrial structure upgrading;
• It also requires continuous improvement in capital allocation efficiency, rather than simply increasing investment.

In other words, if productivity improvements do not materialize as expected, even if the scale of investment expands, economic growth may face constraints from diminishing marginal returns.

The Second Major Challenge: Funding Sources and Structural Balance under High Investment Path

Goldman Sachs believes that investment will remain an important pillar of future growth, but this path is not "cost-free."

At the policy level, it has been made clear that infrastructure, energy, transportation, and digital construction will become investment priorities, and initial measures will adopt a front-loaded and accelerated execution approach. Data shows that public development investment has shown a significant tilt in the short term, with fiscal resources concentrating on capital formation.

However, Goldman Sachs warns that the issue is not "whether to invest," but rather how investment can be continuously and controllably financed:

• If more reliance is placed on domestic savings, it may squeeze private consumption;
• If investment efficiency is insufficient, it may amplify potential risks in the financial system;
• Therefore, stronger and better-structured inflows of foreign direct investment are seen as a key variable to alleviate constraints.

Goldman Sachs estimates that as long as foreign direct investment can steadily supplement the capital needs of high value-added sectors and form positive feedback with industrial upgrading, the investment-driven model will have sustainability.

Institution and Execution: Key Variables Determining Whether the Upper Limit Can Be Reached

In Goldman Sachs' view, what truly determines whether "10% growth" is feasible is not a single macro indicator, but rather institutional execution capability.

The report emphasizes that simplifying administrative processes, enhancing regulatory transparency, and anti-corruption and governance reforms are crucial for improving capital efficiency and reducing transaction costs. If institutional reforms can be continuously advanced, the linkage between productivity improvement and investment returns may form a positive cycle.

Additionally, Goldman Sachs also points out that during the acceleration of urbanization and real estate-related investments, close attention should be paid to asset price fluctuations and financial stability issues, avoiding excessive concentration of growth structure on a single investment channel.

10% More Like an "Upper Limit Target" Rather Than a Benchmark Scenario

Overall, Goldman Sachs does not have a pessimistic judgment on Vietnam's medium-term growth prospects, but clearly maintains caution.

The research report believes that sustained double-digit growth is not unattainable, but it relies on a series of simultaneously established preconditions:

• Significant improvement in labor productivity;
• Optimized investment structure and efficient execution;
• Continuous inflow of foreign direct investment into high value-added sectors;
• Institutional reforms that can translate into real efficiency dividends.

In Goldman Sachs' view, "annual growth of over 10%" should be regarded as a scenario with extremely strict conditions. If any link in this chain deviates, the actual growth result may be closer to a stable but below-target range.

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