Wet-rice agriculture is the most important segment of the Vietnamese economy, and approximately 63% of the population was engaged in agriculture in 2002, down from 66% in 1997, producing 25% of the GDP. While agriculture has continued growth, transforming Vietnam from a net importer 15 years ago into the second-largest exporter of rice, industry has grown even faster. The most diversified area in Southeast Asia in terms of mineral resources, Vietnam is well endowed with coal, tin, tungsten, gold, iron, manganese, chromium, and antimony. Foods, garments, shoes, machines, cement, chemical fertilizer, glass, tires, oil, coal, steel, and paper are the main industrial products. Most of the nation's mineral resources are located in the north, while the south is a major producer of rice and tropical agricultural products, such as rubber, coffee, and tea. The war took its heaviest economic toll on Vietnam's infrastructure, which even in the best of times was far from adequate to afford access to and mobilization of the country's agricultural and industrial resources. Further setbacks came in the late 1970s. In 1976, the regime announced a five-year plan, calling for rapid industrialization and Socialist transformation by the end of the decade. According to official sources, in 1978 floods destroyed 3 million tons of rice, submerged over 1 million hectares (2.5 million acres) of cultivated land, and killed 20% of all cattle in the affected areas along the central coast. The termination of all Chinese aid in the same year, followed by the Chinese attack on the north in February–March 1979, dealt the economy further blows. Vietnam's economy had already been weakened by the military effort in Kampuchea (known as Cambodia until 1976 and again after 1989) and by the suspension of food aid from the EC, the United Kingdom, Australia, and New Zealand because of objections to Vietnam's refugee policies. Reportedly, the country came close to general famine in 1979.
In 1979, faced with serious shortages of food and consumer goods, Vietnamese leaders approved a new program granting incentives for increased productivity and delaying the construction of farm collectives in the southern provinces. During the 1981–85 five-year plan, emphasis was placed on agriculture and the production of consumer goods. Economic performance improved in the early 1980s, with the growth rate estimated at about 10% annually. Price inflation, however, became a major problem, averaging 700% in 1986–87.
Policy changes were introduced incrementally with economic liberalization preceding consideration of political liberalization. On 3 February 1994 US president Clinton lifted the trade embargo against Vietnam that had been in place for 33 years. The reforms helped Vietnam's economy to grow at a rate of 9% a year during most of the 1990s and by almost 10% in 1996. Growth in the industrial sector was especially strong at over 12% annually between 1988 and 1997. In Hanoi, the increased presence of a foreign community spurred the availability of western-style restaurants and bars, hotel and airport renovation and upgrading, accessible public telephones, and advertising of consumer goods. However, with the onset of the Asian financial crisis, triggered in June 1997 by the return of Hong Kong to Chinese Rule, growth, which was 8.2% for the year in 1997, dropped to 3.5% in 1998 and 4.5% in 1999. Growth increased to 6.7% in 2000, and to 6.8% in 2001. Projected growth for 2002 is 7%.
Unemployment grew during the 1990s to an estimated 25% in 1995. Several factors contributed to Vietnam's growing unemployment: natural increases in the population; monetary and other adjustments for hyperinflation, which intensified the unemployment problem by limiting growth in some sectors of the economy; the return of demobilized troops from Cambodia; repatriation of refugees; workers laid off from state enterprises; and returning guest workers. However, with capital investment, this labor force could be turned into a resource for growth in labor-intensive manufacturing, considering the low wage base in Vietnam, the high skills levels, and high motivation. Unemployment in urban centers was reported as 6.44% in 2000 and 6.28% in 2001. In the Red River delta, unemployment was7.34% in 2000 and 7.07% in 2001. Rural underemployment was estimated at 26.1% for 2000 and 25.7% for 2001. Inflation, which jumped from 3.1% (period average) in 1997 to 7.9% in 1998, moderated to 4.1% in 1999, and has been at negligible levels since: -1.7% in 2000 and 0.8% in 2001. The Party leadership is concerned about persistent unemployment and underemployment, the widening gap between rich and poor, and increases in bankruptcy, prostitution, and corruption.