[A raised peace sign gesture held up in front of the Vietnamese national flag. Photo Credit to Pexels]

Vietnam is expected to overtake Thailand as Southeast Asia’s second-largest economy by the end of this decade, according to recent projections by the Centre for Economics and Business Research (CEBR) and International Monetary Fund (IMF) data.

Fueled by rapid industrialization, foreign investment, and strategic reforms, Vietnam’s economic ascent has accelerated significantly over the past decade. 

The CEBR forecasts that by 2036, the country will not only surpass Thailand but also break into the world’s top 20 economies, ranking second in Southeast Asia behind only Indonesia. 

This momentum is powered by Vietnam’s current five-year economic plan (2021–2025), which targets average annual growth of 6.5%. 

The ambitious goal reflects growing confidence in the country's expanding manufacturing base, which has become increasingly embedded in global supply chains thanks to a growing web of free trade agreements. 

Exports of electronics, textiles, and agricultural products have all contributed to consistent growth, attracting international corporations seeking alternatives to China for production.

The IMF reports that Vietnam has already secured its position as Southeast Asia’s third-largest economy in 2025, with a GDP of $571.1 billion. 

Thailand currently remains ahead with a slightly larger economy, but by 2027, the IMF expects the two countries to be nearly tied, with Thailand at $692 billion and Vietnam closely trailing at $690 billion. 

The CEBR projects Vietnam will definitively surpass Thailand in economic output after 2028.

Several factors have fueled this surge. 

The legacy of Đổi Mới, a sweeping set of market-oriented reforms launched in 1986, laid the foundation. 

These reforms dismantled the centralized command economy, liberalized trade, and welcomed foreign investment. 

These changes transformed Vietnam from an agrarian society into one of the world’s most promising emerging markets.

Foreign direct investment (FDI) has played a critical role. 

Major investors from the United States, Japan, South Korea, and the European Union have poured billions into Vietnam, drawn by its political stability, geographic proximity to key Asian markets, and improving infrastructure. 

The country's membership in numerous trade pacts, including the EU-Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, has further strengthened its export competitiveness.

Vietnam’s manufacturing sector, particularly in electronics and garments, has grown into a regional powerhouse. 

As labor costs continue to climb in China, many global companies have turned to Vietnam as a reliable, cost-effective alternative. 

Major global brands now source components and assemble products in Vietnamese factories, contributing to job growth and industrial expansion.

The tourism sector has also become a notable economic driver. 

In the first quarter of 2024 alone, Vietnam recorded more than 4.6 million international tourist arrivals, a 72% increase year-over-year. 

Domestic tourism is also surging, with the number of internal trips quadrupling over the past decade. 

Tourism now accounts for approximately 7% of GDP and supports millions of jobs.

Beyond industrial and tourism growth, Vietnam’s rising middle class is fueling domestic consumption. 

Retail, real estate, and services are expanding, and the country’s growing digital economy is beginning to show promise as a future engine of growth.

Still, challenges lie ahead.

The CEBR report notes that Vietnam’s aging population, combined with global economic headwinds and trade slowdowns, could complicate its growth path.

Technological disruption and climate vulnerability also pose long-term structural risks. 

Addressing these issues will require focused policy reforms, investment in education and workforce development, and a stronger focus on climate resilience.

Despite these challenges, the Vietnamese government remains committed to reaching high-income country status by 2045. 

Achieving this goal will require an average annual per capita income growth of 5%, a benchmark that aligns with current development strategies.

If Vietnam’s growth continues as projected, its economic output will surpass those of Poland, Switzerland, Belgium, and even Australia by 2036. 

The country’s transformation from postwar stagnation to an industrialized economy stands as one of Asia’s most remarkable economic success stories.