The decline in the birth rate in Vietnam reached a new record in 2024: on average, women in the country give birth to 1.9 children. Thus, for the third time in a row, the birth rate remains below 2.1 - and this against the backdrop of a booming economy.
Currently, the Vietnamese are about 100 million, but the Ministry of Health fears that this will not remain so - in the middle of the century the population may begin to decline.
Ho Chi Minh - economic growth, but fewer and fewer children
This trend is already a fact in large cities. In Ho Chi Minh City, the economic hub in the south of the country, the birth rate fell from 1.39 children in 2022 to just 1.32 in 2023. A decline is also expected in this city in 2024.
The city authorities have responded to the trend with concrete measures - such as supplements for women under 35 with two children and small financial assistance for check-ups during pregnancy and immediately after childbirth, intended for families with lower incomes. These measures are to be expanded in the future - with the hope of increasing the birth rate to 1.6 children by 2030.
The economic consequences for Vietnam
State media are already warning of a "demographic time bomb", and the market research institute Ipsos is analyzing the consequences for the economy. According to his observations, the decline in the birth rate brings both challenges and opportunities for brands and companies.
Vietnam is attractive to foreign investors who want to develop their business not only in China. For them, the decline in the birth rate is not a cause for concern for now. Quite the opposite: the country continues its rapid rise.
Last year, GDP growth was 7 percent. And although foreign investment fell by three percent compared to the previous year (totaling $38 billion), if trade tensions between the US and China deepen under Trump, much more Western capital will flow to Vietnam.
Politically, Vietnam strives for balanced relations with its international partners. As economist Chris Humphrey pointed out to DW, he has not yet heard of European companies abandoning their investments because of Vietnam's demographic problems. At the same time, however, he expects Hanoi to take measures in areas such as elderly care, productivity and automation, as well as invest in healthcare to cope with the problems of an aging society.
Other experts agree. If the country wants to continue attracting investors, the government should focus on economic reforms. "Demographics are part of the equation, but only part", says Dan Martin of the consulting firm Dezan Shira & Associates.
He explained to DW that other factors play a role for investors: "Vietnam's strong economic growth and its role in regional supply chains - thanks to all this, it remains an attractive target country".
End of the "demographic dividend"
In 1986, when Vietnam embarked on market reforms after decades of a disastrous planned economy, almost 40 percent of the population was under 16. Growth based on a young working population was the foundation of economic development.
Today, Vietnam is in 32nd place among the world's most developed economies. But unlike before, children today make up only a fifth of the population. And the proportion of people aged 15 to 64 is projected to fall from 69 percent in 2020 to 63 percent in 2050.
Fall in birth rate concerns
In 2020, people over 65 made up just 8.4 percent of the population. However, by 2034, Vietnam is projected to become an "aging" society, meaning 14 percent of the population is 65 or older.
Experts warn that the shrinking working-age population will lead to a decline in productivity and slow growth. In addition, the aging population will weigh more on state resources, as the number of workers paying taxes decreases in parallel.
As early as 2017, the IMF warned that Vietnam was in danger of getting old before it got rich - although the population problems in the country are not as serious as in some neighboring countries. Because if according to forecasts, society in Vietnam will be aging by 2034, in Thailand this happened already in 2020, and in Singapore - in 2017.
What can Hanoi do?
Vietnam has had a strict two-child policy for decades. It also means civil servants or employees of state-owned companies can be fired if they have a third child. Members of the ruling Communist Party are expelled from the party if they have more than two children. The Communist government has been discussing ending the policy since mid-2010.
A Population Law is currently being drafted and is expected to be submitted to the National Assembly this year. It includes measures to encourage birth rates and will eventually lift penalties for families with a third child.
Author: David Huth