A recent report by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has identified Vietnam as one of the 11 countries in the region most vulnerable to climate change from a macroeconomic perspective. Released on Tuesday, the 2025 edition of the Economic and Social Survey of Asia and the Pacific paints a sobering picture of the challenges facing the region, where economic growth and climate risks are increasingly intertwined. Despite Vietnam’s robust economic performance, contributing significantly to global expansion, the report warns that the country, alongside others, faces substantial hurdles in adapting to climate shocks and transitioning to a greener economy.
Climate Risks and Economic Resilience
The ESCAP report underscores the complex interplay between macroeconomic stability and climate vulnerability in the Asia-Pacific region, which drove 60 percent of global economic growth in 2024. However, this dynamism masks underlying fragilities. Economic growth in developing Asia-Pacific economies slowed to 4.8 percent in 2024, down from 5.2 percent in 2023 and 5.5 percent in the pre-COVID-19 years. For least developed countries in the region, the growth rate was even lower at 3.7 percent, far below the 7 percent annual GDP growth target set by Sustainable Development Goal 8. 
Vietnam, alongside nations such as Afghanistan, Cambodia, Laos, and Myanmar, is flagged as particularly exposed to climate risks. These risks are not merely environmental but have profound economic implications, including potential disruptions to productivity, increased public debt, and heightened trade tensions. The report suggests that while some countries in the region have made strides in mobilizing climate finance and adopting green policies, others, including Vietnam, grapple with fiscal constraints and limited public financial management capacity.
Armida Salsiah Alisjahbana, UN Under-Secretary-General and Executive Secretary of ESCAP, highlighted the dual challenge facing policymakers. “Increasing global economic uncertainty and deepening climate risks are also not making it easy for the fiscal and monetary policymakers” she said. She emphasized the need for both sound national policies and coordinated regional efforts to safeguard long-term economic prospects while addressing climate change.
Vietnam’s Economic Landscape Amid Climate Threats
Vietnam’s economy has been a standout in the region, with consistent growth driven by manufacturing, exports, and foreign investment. The country has become a key player in global supply chains, particularly in electronics and textiles. However, its geographic and economic characteristics heighten its vulnerability to climate change. Coastal areas, which house significant portions of the population and economic activity, are at risk of rising sea levels and flooding. The Mekong Delta, often referred to as Vietnam’s “rice bowl,” faces salinization and land loss, threatening agricultural output and food security.
The ESCAP report points to slower productivity growth as a critical concern for Vietnam. As the country transitions from a low-cost labor model to higher value-added industries, climate shocks could derail progress. For instance, extreme weather events, which have become more frequent, disrupt supply chains and infrastructure, increasing costs for businesses and the government. Public debt risks are also a concern, as funding climate adaptation and mitigation projects may strain national budgets already burdened by post-pandemic recovery efforts.
Moreover, Vietnam’s reliance on coal for energy production complicates its transition to a greener economy. While the government has committed to net-zero emissions by 2050 and signed international agreements to phase out coal, the practical challenges are immense. Renewable energy projects, such as wind and solar farms, are expanding, but they require significant investment and policy support to scale effectively. The ESCAP survey suggests that without proactive government intervention, Vietnam may struggle to balance economic growth with environmental sustainability.
Disparities in Regional Climate Readiness
The Asia-Pacific region exhibits stark disparities in climate resilience. Countries like Singapore and South Korea have leveraged strong financial systems and technological innovation to implement green policies and attract climate finance. In contrast, nations like Vietnam face structural challenges, including weaker financial frameworks and limited capacity to manage large-scale climate projects. This disparity underscores the need for tailored solutions that account for each country’s unique economic and environmental context.
The report also highlights the potential for regional cooperation to bridge these gaps. By fostering inclusive economic partnerships, Asia-Pacific countries can share knowledge, resources, and technology to address climate challenges collectively. For Vietnam, collaboration with regional neighbors could provide access to expertise and funding for green initiatives, such as reforestation projects or sustainable urban planning. Mangrove restoration efforts in provinces like Quang Ngai, which aim to mitigate climate impacts by protecting coastal areas, are an example of local initiatives that could benefit from broader regional support.
Opportunities in Green Industries
Amid the challenges, the ESCAP report identifies significant opportunities for Vietnam and the broader region to capitalize on green industries as new engines of growth. The Asia-Pacific region is well-positioned to lead in green value chains, from renewable energy technologies to sustainable agriculture. Vietnam, with its young workforce and growing industrial base, could emerge as a hub for green manufacturing if supported by the right policies.
Government intervention will be crucial in this transition. The report calls for proactive measures to upgrade economic sectors, focusing on higher productivity and value-added industries. For Vietnam, this could mean investing in education and training to prepare workers for green jobs, as well as providing incentives for businesses to adopt sustainable practices. Tax breaks for renewable energy companies or subsidies for electric vehicle production are potential strategies to stimulate growth in these sectors.
Furthermore, embracing regional economic cooperation could enhance Vietnam’s competitiveness in green industries. By aligning with regional standards and participating in cross-border initiatives, the country can attract foreign investment and integrate into global green supply chains. Such efforts, if successful, could position Vietnam as a leader in sustainable development within the Asia-Pacific region.
Navigating Uncertainty with Policy Innovation
The ESCAP report serves as a call to action for Vietnam and its regional counterparts to navigate the evolving landscape of economic and climate risks. National policies must prioritize resilience, not only in terms of infrastructure but also in economic planning. For Vietnam, this means integrating climate considerations into fiscal and monetary policies, ensuring that budgets account for potential disruptions caused by extreme weather or resource scarcity.
At the same time, monetary policymakers face the challenge of balancing inflation control with the need to fund climate adaptation projects. Innovative financing mechanisms, such as green bonds or public-private partnerships, could provide the necessary resources without exacerbating debt risks. Vietnam has already taken steps in this direction, with pilot projects for green bonds gaining traction, but scaling these efforts will require sustained commitment and international support.
Public awareness and engagement are also critical. As climate risks become more apparent, communities across Vietnam are advocating for stronger environmental protections and sustainable development. Grassroots movements, supported by local governments, are pushing for initiatives like mangrove reforestation and community-led renewable energy projects. These efforts, while small in scale, demonstrate the potential for collective action to drive meaningful change.
Looking Ahead
As Vietnam grapples with its dual role as an economic powerhouse and a climate-vulnerable nation, the path forward remains uncertain. The ESCAP report highlights the urgent need for coordinated action, both within the country and across the Asia-Pacific region, to build resilience against climate shocks. Questions linger about how Vietnam will balance its ambitious growth targets with the pressing demands of environmental sustainability. With the right policies and regional partnerships, however, the country has the opportunity to transform challenges into catalysts for a greener, more prosperous future.
