If the post–Cold War era is defined as a period when great power cooperation generally prevails over great power competition, its final demise arrived in 2022. Following Russia's full-blown invasion of Ukraine in February, relations between the West and Russia reached the highest level of hostility since the mid-1980s. The United States’ National Security Strategy released in October identifies China as America's biggest long-term strategic competitor and declares that “the post–Cold War era is definitively over and a competition is under way between the major powers to shape what comes next”. How has Vietnam navigated the growing uncertainties and disruptions in the global politics and economy as the post–Cold War era came to an end? This chapter examines the key developments in the country's economy, domestic politics and foreign relations throughout 2022, and emphasizes the need for the country's leadership to embrace a new worldview going forward.

The Economy

Vietnam's economy in 2022 was on a recovery path after two years of slow growth because of the COVID-19 pandemic. The gross domestic product (GDP) is estimated to grow by 8 per cent, the fastest pace annually since 1997 and a sharp rebound from the 2.9 and 2.6 per cent levels of 2020 and 2021, respectively. This performance can be attributed to a number of factors, including the government's macro-economic management, the removal of COVID-19 restrictions, the achievement of nationwide vaccination, and increased foreign investments and better access to export markets as a result of US-China trade tensions, China's zero-COVID policy and Vietnam's numerous free trade agreements (FTA).

In January, the National Assembly approved a US$15.4 billion economic stimulus package that accounts for 4.2 per cent of the 2021 GDP. The stimulus package was expected to boost the GDP growth by 2.9 percentage points in 2022 and 0.2 percentage points in 2023, helping to meet the 6.5–7 per cent target for the average annual GDP growth of the 2021–25 period. While much of the world suffered from high inflation as a result of the Russia-Ukraine war, the Western sanctions on Russia, and the pandemic-driven bottlenecks in the global supply chains, Vietnam was able to keep inflation at an estimated 3.5 per cent for the year, significantly lower than the average 5.1 per cent for Southeast Asia and 4.4 per cent for developing Asia.