Photo Credit: Eye on Asia
According to Nikkei Asia, Vietnam is on track to surpass Thailand’s economy as early as this year, driven by a significant government-led infrastructure expansion. While Vietnam aims for a real GDP growth of 8% in 2025 and over 10% in subsequent years, Thailand’s growth is decelerating. Domestic political instability and border tensions with Cambodia are negatively impacting the Thai economy, with OECD projection indicating only a 1.5% increase in real GDP for 2026.
The primary driver of Vietnam’s growth surge is its comprehensive infrastructure development program, with public investment set to rise by 26% in 2026. Projects include a new airport near Ho Chi Minh City and a China-backed rail initiative already underway. Economist Can Van Luc noted that this investment could boost Vietnam’s growth by 1.6 percentage points, potentially elevating it to Southeast Asia’s third-largest economy after Indonesia by 2027.
Meanwhile, Thailand faces challenges such as high household debt, which hampers consumption, and a slow recovery in tourism. The manufacturing sector is also contracting, with Suzuki Motor withdraw from vehicle production and Honda Motor reducing its output. Although Vietnam still encounters issues like bureaucratic red tape and stalled projects, its aggressive investment approach positions it to surpass Thailand’s nominal GDP and achieve a GDP per capita exceeding $5,000.