## Chart of the Week: A Golden Aging for Vietnam?

_IMF Blog, July 17, 2017_

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## Bibliographic details
- Authors: The Editors
- Published: July 17, 2017

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### Demographic trends and risk
- Vietnam’s population is 92 million.
- The median age is 26.
- Vietnam’s demographic dividend began reversing in 2013.
- Birth rates are falling and life expectancy is rising.
- The country is “growing old before it grows rich” because aging is occurring faster and at an earlier stage of development than in many other countries.
- The decline in the share of working-age people is projected to be a drag on per capita growth between 2020 and 2050.

### Economic implications
- A shrinking share of working-age people will reduce the labor supply and likely depress per capita growth between 2020 and 2050.
- Many Vietnamese workers are in physically taxing, low-productivity occupations (currently, 40 percent of workers are employed on farms), which may reduce overall labor productivity as the population ages.
- An aging population implies more spending on pensions and health care and less tax revenue from workers, creating fiscal strain.

### Policy recommendations (as outlined in the IMF staff paper Vietnam: Selected Issues, published on July 5)
- Increase participation in the workforce among women and older workers, and encourage movement into higher-productivity occupations.
- Raise the retirement age (currently 60 for men and 55 for women), reduce incentives for early retirement, and align indexation of benefits more closely with inflation.
- End preferential access to capital and land enjoyed by state-owned enterprises to create a level playing field for private companies and shift allocation of resources to more productive uses.
- Recapitalize state banks to reduce non-performing loans and increase flow of credit to the economy.

### Positive factors and outlook
- Vietnam’s high educational achievement and ongoing reallocation of labor from low-productivity agriculture to higher-productivity industry and services should help boost growth.
- With appropriate policy action, Vietnam can mitigate fiscal pressures and realize longer, healthier, more productive, and more prosperous lives for its population.

*Chart of the Week: A Golden Aging for Vietnam?, The Editors, July 17, 2017*

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## References

- [https://www.imf.org/wp-content/uploads/2017/07/BLOG-1024x600-VIETNAM-Dalat-Women-with-mask-working-in-factory_Gerhard-Zwerger-Schoner-imageBroker_Newscom.ibpremium263300.jpg](https://www.imf.org/wp-content/uploads/2017/07/BLOG-1024x600-VIETNAM-Dalat-Women-with-mask-working-in-factory_Gerhard-Zwerger-Schoner-imageBroker_Newscom.ibpremium263300.jpg)
- [https://www.imf.org/wp-content/uploads/2017/07/ENG_Jul_11_Vietnam_COTW-1.jpg](https://www.imf.org/wp-content/uploads/2017/07/ENG_Jul_11_Vietnam_COTW-1.jpg)
- [Vietnam: Selected Issues](http://www.imf.org/en/Publications/CR/Issues/2017/07/05/Vietnam-Selected-Issues-45046)
- [annual assessment of the country’s economy](http://www.imf.org/en/Publications/CR/Issues/2017/07/05/Vietnam-2017-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-45045)
- [Regional Economic Outlook](http://www.imf.org/en/news/articles/2017/05/08/na050917-asia-dynamic-economies-continue-to-lead-global-growth)

_Source: https://www.imf.org/en/blogs/articles/2017/07/17/chart-of-the-week-a-golden-aging-for-vietnam_