As published in VNeconomy on 16 December 2025

At a time when the global economy continues to operate largely under a linear model, the circular economy is emerging as an inevitable development strategy. Drawing on Viet Nam’s realities and international experience, UNDP emphasizes the role of the circular economy in retaining resource value, reducing emissions, creating jobs, and strengthening economic resilience.

On 16 December 2025, at the Government Headquarters, the Central Policy and Strategy Commission and the Government co-hosted the Viet Nam Economic Forum 2025, Outlook 2026, under the theme “Viet Nam’s Economy: Rapid and Sustainable Development, Green Transition in the Digital Era.”

Within the framework of the Forum, at the thematic session on the circular economy titled “Promoting the Green Transition and Developing the Circular Economy to Realize High Growth and Sustainable Development Goals”, co organized by the Central Policy and Strategy Commission, the Ministry of Agriculture and Environment, and the Viet Nam Association of Economic Science, Ms. Francesca Nardini, Deputy Resident Representative of the United Nations Development Programme (UNDP) in Viet Nam, delivered a speech sharing key insights, set within the global context across economic sectors in general and in Viet Nam in particular.

ONLY 7 PERCENT OF THE GLOBAL ECONOMY OPERATES UNDER A CIRCULAR MODEL

Ms. Francesca Nardini expressed her pleasure at attending the event and her honor in representing UNDP, sharing not only UNDP’s experience with the circular economy but also practical experiences in the Vietnamese context.

According to Ms. Francesca Nardini, although awareness and understanding of sustainable development have improved, globally, most economies continue to operate under a linear economic model. Currently, only about 6.9 percent of the global economy operates under a circular economy model, a figure that is expected to remain at approximately 7 percent in 2025. This poses significant challenges.

The linear economy typically follows a “extract, produce, consume, dispose” model, generating large volumes of waste and placing severe pressure on the environment. At the same time, when countries invest to boost GDP growth to address these issues, the value created is not retained within the economy but instead leaks along the value chain.

By contrast, the circular economy allows materials to be used before disposal, extends product lifecycles, and enables recycling or reuse for other purposes. As a result, the value of materials is retained for longer within the economy.

“The circular economy is not just an environmental issue; it is also an important economic strategy. For Viet Nam, a rapidly growing economy undergoing strong structural transformation and now the fourth largest economy in ASEAN, considering resource efficiency is absolutely essential,” Ms. Francesca Nardini emphasized.

A SYSTEMS APPROACH TO THE CIRCULAR ECONOMY

The UNDP representative noted that over the past three decades, material consumption in Viet Nam has increased sharply, driving high demand for energy and infrastructure and creating growing pressures from solid waste, landfilling, environmental pollution, air pollution, and long-term climate change. This requires Viet Nam not only to invest in mitigating negative impacts, but also to promote the development of the circular economy more strongly.

Data from Europe and the OECD indicate that Viet Nam has a solid foundation for implementing this model. According to projections, by 2030 and 2050, the circular economy is expected to help reduce 30 to 34 percent of municipal waste, cut 40 to 70 percent of greenhouse gas emissions, create jobs, enhance economic resilience, and reduce dependence on imported raw materials.

Ms. Francesca Nardini stated: “In Viet Nam, UNDP has implemented localized circular economy models.”

“So where should Viet Nam begin?” Ms. Francesca Nardini asked. Based on UNDP’s experience in Viet Nam and globally, she explained that the approach is focused and practical. Through pilot models, risks, opportunities, and benefits can be assessed, leading to more robust solutions.

According to UNDP, among priority sectors, agriculture and food systems play a vital role, contributing about 11.6 percent of GDP and 26 percent of total employment. Viet Nam currently produces approximately 100 to 105 million tons of agricultural products each year, consuming significant energy and resources, and therefore holds substantial potential for circular solutions.

The energy sector is also a key pillar, contributing around 4 percent of GDP and providing jobs for nearly 4 million workers. Improving energy efficiency and implementing circular solutions in this sector will help reduce pollution and enhance economic competitiveness.

In addition, sectors such as plastics, textiles, electronics, and beverages currently account for up to 60 percent of landfill waste and largely continue to operate under linear models. With improvements in product design, extended material lifecycles, and increased recycling rates, these sectors could generate significantly higher economic value.

In Viet Nam, UNDP has implemented localized circular economy models. Specifically, in Hue, UNDP supported material and waste flow mapping to identify leakage points and emission sources, thereby integrating circular economy principles into investment decisions.

The analysis results show that Hue identified six priority sectors with fourteen intervention initiatives. By 2030, these initiatives are expected to increase regional GDP by 4.5 percent and employment by 2 percent. By 2050, they are also expected to reduce greenhouse gas emissions by 41 percent, while promoting sustainable socio-economic development for the city.

Overall, the UNDP approaches the circular economy from a systems perspective, linked to governance frameworks, action plans, and pilots in localities such as Hue and Da Nang, which are scaled up through industry clusters and supply chains, while ensuring a just transition that includes informal workers.

In concluding her remarks, Ms. Francesca Nardini emphasized that the circular economy currently represents only a small share of the economy. Therefore, stronger action is needed to transform it into a core development strategy, accelerate pilots, create jobs, upgrade skills, mobilize public and private investment, and advance sustainable finance.