Thailand and Vietnam's "GDP Competition" Influences the Economic Landscape of Southeast Asia

Editor's Note: "With the accelerated economic growth, Vietnam's GDP is expected to surpass Thailand this year." Thailand's "National News" reported on the 5th that due to public investment, Vietnam's nominal GDP may exceed Thailand's by 2026. Meanwhile, Thailand is facing challenges such as slowing economic growth, debt issues, and border conflicts. The American magazine "The Diplomat" mentioned that Vietnam's economic performance has been particularly outstanding in the region when reviewing major economic events in Southeast Asia over the past year. On the 5th, Vietnam's General Statistics Office released the latest data, showing that Vietnam's GDP grew by 8.46% year-on-year in the fourth quarter, with an annual GDP growth rate of 8.02%. Against the backdrop of the GDP competition between Vietnam and Thailand, Japan's "Nikkei Asia Review" reported that this will impact the entire Southeast Asian economic landscape. So, what are the reasons behind Vietnam's rapid economic growth? What changes will the Southeast Asian economic landscape undergo in the future?

Foreign Media: Vietnam's Economic Performance is Outstanding, Thailand Under Pressure

After Vietnam announced its latest GDP growth rate for the fourth quarter, many Thai media outlets paid attention. Thailand's "Kaohoon International" reported that Vietnam's economy performed better than expected in the last quarter of 2025, with the vitality of manufacturing, investment, and trade helping the country withstand the impact of U.S. tariffs. "Vietnam remains one of the fastest-growing economies in the world, benefiting from active credit issuance, a weakening Vietnamese dong exchange rate, and a recovery in tourism."

Regarding the newly released GDP data, Vietnam News Agency reported that this figure stands out particularly against the backdrop of many adverse factors affecting global economic development. The current Vietnamese government still has ample monetary policy space, and as market vitality gradually releases and institutional reforms deepen, Vietnam's economic growth rate is expected to achieve double-digit targets in the 2026-2030 period.

"Vietnam's goal is to achieve over 10% growth in 2026 and beyond." According to the "Nikkei Asia Review," some observers believe that the goal of "double-digit" growth is overly optimistic, but Prime Minister Pham Minh Chinh emphasized again at an economic forum last December that achieving double-digit growth is feasible.

Reports indicate that if economic growth accelerates as planned, Vietnam's nominal GDP is expected to reach $500 billion by 2026 or 2027, surpassing Thailand, and per capita GDP will also exceed $5,000, gradually approaching the level of Indonesia, the largest economy in Southeast Asia.

Many foreign media outlets have also noted Vietnam's rapid economic growth over the past year. The American magazine "The Diplomat" recently reviewed some significant economic events in Southeast Asia in 2025 and reported that the entire region maintained a strong growth momentum, with Vietnam's performance particularly outstanding, proving that the export-oriented development model remains effective, especially with the geographical advantage of bordering China. The article also specifically mentioned that among the major economies in the region, Thailand has become an exception: under the pressure of the export-oriented growth model, Thailand's economy is gradually falling into difficulties. Thailand's economic growth rate is very low, and there seems to be no obvious solution, which is mainly related to the global economic situation, ongoing armed conflicts with Cambodia, and political changes The government cannot introduce too many effective policies.

Thailand has not yet announced its GDP for the fourth quarter of 2025, but relevant officials have predicted that GDP growth in the fourth quarter will be at least 1%. Meanwhile, the Organisation for Economic Co-operation and Development (OECD) predicts that Thailand's real GDP growth rate in 2026 will only be 1.5%, a decrease of 0.5 percentage points compared to 2025. The agency believes that high household debt is suppressing consumption, the recovery of the tourism industry is slow, and the tariffs imposed by the United States will further impact manufacturing, making it possible for Thailand to be surpassed by Vietnam and even face the risk of being overtaken by the Philippines.

In comparing the industrial development of the two countries, Ge Hongliang, Vice Dean of the ASEAN Institute at Guangxi University for Nationalities, stated in an interview with the Global Times on the 6th that there are both comparable aspects and significant differences in the development of Thailand and Vietnam. In terms of industrial development level and economic stage: Thailand's industrial development is generally ahead of Vietnam, especially in the two core fields of automobiles and semiconductors. Thailand has the only complete automotive industry chain in Southeast Asia, which has long attracted Japanese car companies like Nissan and Chinese new energy vehicle companies like BYD to establish operations; in the semiconductor industry, Thailand is also ranked among the top tier in Southeast Asia along with Singapore and Malaysia. However, Thailand's economic development is currently facing multiple constraints, with domestic political instability and border disputes severely affecting the recovery of the tourism industry, which may lead to economic data performing below expectations. In contrast, Vietnam's industrial level is generally lower than Thailand's, and its economic development focus differs from that of Thailand, but Vietnam's economic growth momentum is strong, and it is expected to further enhance its economic position in Southeast Asia in the future.

Huang Dongri, a distinguished researcher at the Regional Country Studies Center of Guangxi Normal University, stated in an interview with the Global Times on the 6th: "In the economic development pattern of Southeast Asia, Thailand still belongs to the second tier, while Vietnam is in the third tier. However, in recent years, due to political instability and other reasons, Thailand's economic growth has been weak, while Vietnam is rapidly catching up to the second tier and is expected to surpass Thailand by 2026."

"Vietnam has a unique position in the global manufacturing chain"

"Nationwide infrastructure construction is the core driving force behind Vietnam's economic growth." The Nikkei Asia Review quoted Nguyen Van Luc, an economist at the Vietnam Investment Development Bank, predicting that public works investment will grow by about 26% in 2026, contributing 1.6 percentage points to Vietnam's overall economic growth. In 2026, a new airport near Ho Chi Minh City will be put into operation, and construction work on a railway supported by China in the north has also begun. Data from the General Statistics Office of Vietnam shows that the industrial sector has achieved its highest growth rate since 2019.

In addition, "Vietnam welcomed a record number of foreign tourists in 2025." According to a report by the Hong Kong South China Morning Post on the 5th, data from the General Statistics Office of Vietnam shows that the country received approximately 21.2 million international visitors last year, a year-on-year increase of over 20.4%. Nguyen Chong Kien, Director of the Vietnam National Tourism Administration, stated that this data significantly enhances Vietnam's position and brand influence in the global tourism landscape. Among them, China is the largest source of tourists for Vietnam, with the number of Chinese visitors to Vietnam in 2025 increasing by 41.3% year-on-year "There are many factors behind Vietnam's economic growth," Huang Dongri told a Global Times reporter. The stability of Vietnam's domestic political situation, the significant optimization of the business environment after the implementation of administrative reforms in 2025, and the acceleration of marketization processes and changes in growth models; the continuous release of demographic dividends from a population of over 100 million with a young demographic structure; and the comprehensive integration into the international community further consolidating its position as a key hub for the "re-layout" of the Asian industrial chain, among others. In recent years, Vietnam's exports of computers, electronic products, and components have been rising sharply, contributing over half of the export growth, supported by the electronic industry cluster in northern Vietnam, primarily composed of Chinese-funded enterprises.

According to Vietnamese media reports, in the first ten months of 2025, Vietnam's exports of computers, electronic products, and components reached USD 87.29 billion, a year-on-year increase of 47.9%, accounting for 22.3% of Vietnam's total exports. During the same period, Vietnam's total imports of computers, electronic products, and components also reached USD 123.15 billion, a year-on-year increase of 39.1%, accounting for nearly 33% of the national total imports, with the main source of imports being China, highlighting the increasingly close and potentially vast development of the China-Vietnam industrial and supply chains.

Huang Dongri analyzed, "Undoubtedly, Vietnam has a unique position in the global manufacturing chain. Vietnam is one of the important choices for Chinese manufacturing to go overseas. Geographically, Vietnam is connected to China by land and sea, allowing for smooth supply chain connections and short transportation cycles. Institutionally, Vietnam relies on two major free trade agreements, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), allowing products to enter multiple national markets. From an industrial perspective, Vietnam has formed a complete chain from textiles and electronics to new energy."

Ge Hongliang believes that the rapid growth of Vietnam's economy is primarily driven by the transfer of trade and investment against the backdrop of the global industrial chain reshaping. Since 2018, not only have companies from Europe, America, Japan, and South Korea shifted their investment destinations to Vietnam, but many Chinese companies have also chosen to establish a presence there. Vietnam's market location advantage in Southeast Asia makes it an important part of China's industrial layout. The trade exchanges between China and Vietnam are mainly composed of intermediate products, which fully confirms the clear division of labor formed in the upstream and downstream of the industrial chain between the two countries. The industrial cooperation between the two countries is not merely a simple transfer of capacity but includes strategic layouts involving high-end industries, and this cooperation model continues to deepen under the promotion of the China-ASEAN regional integration process.

Economic "Changes" Prompt Foreign Companies to Adjust Investment Strategies

"The economic landscape of Southeast Asia is changing," reported the Nikkei Asia Review. The changing trends in the region's economy have already been reflected in new car sales. In Indonesia, the largest market in Southeast Asia, sales from January to October 2025 were about 660,000 vehicles, a decrease of about 10% compared to the same period last year. Additionally, according to the Vietnamese automotive website VNAUTO, the cumulative sales of the Vietnamese automotive market in the first eleven months of 2025 were about 520,000 vehicles, nearing historical highs.

The report further stated that Thailand and Indonesia have long been the two main destinations for Japanese companies expanding into Southeast Asia. Automotive manufacturers have established local supply chains utilizing the abundant labor resources of these two countries, but they are now reassessing their strategies: last year, Suzuki exited part of its vehicle production in Thailand, while Honda reduced its related production scale in Thailand In September last year, Vietnamese Deputy Prime Minister Hu Duc Phuc met with Akio Toyoda, CEO of Toyota Motor Corporation for the Asia-Pacific region. At that time, Toyota expressed its plan to continue expanding its investment in Vietnam, aiming to improve the operational efficiency of its Vietnamese factory. In terms of attracting foreign investment, in December last year, the Vietnamese National Assembly passed the Investment Law (Amendment), which promotes the simplification of administrative procedures, enhances operational freedom, and lowers investment entry barriers, creating a more transparent and efficient business environment for foreign enterprises entering the Vietnamese market. By December 31, 2025, Vietnam's actual foreign direct investment (FDI) is expected to reach approximately USD 23.6 billion, a year-on-year increase of 8.9%, marking a new high for the same period in nearly five years. Among them, foreign investment in the manufacturing sector reached USD 22.88 billion, accounting for 82.8% of the total actual investment.

However, regarding Vietnam's rapid economic growth, some media have raised concerns about underlying issues. The Nikkei Asia Review analyzes that the tariffs imposed by the United States on Southeast Asian countries will also have an impact, particularly on Vietnam, which ranks third in trade surplus with the U.S., making its domestic employment vulnerable to trade relations with the U.S. Huang Dongri told Global Times reporters that Vietnam's exports heavily rely on major markets such as the U.S. and the European Union, and this growth often carries uncertainties, increasing the risks for enterprises and making Vietnam susceptible to fluctuations in the global economic and political situation. Some Vietnamese experts responded that, given the unpredictability of U.S. policies, Vietnam's exports will also diversify more, targeting markets in the Middle East, Africa, and South America.

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