Vietnam’s growth reshapes Southeast Asia’s economic rankings

Vietnam is poised to overtake Indonesia in nominal gross domestic product (GDP) per capita this year, as rapid economic expansion, foreign investment and rising exports strengthen its position among Southeast Asia’s fastest-growing economies.

The International Monetary Fund (IMF) forecasts that Vietnam’s nominal GDP per capita will increase by 8.9% in 2026 to US$5,259, almost doubling its level over the past decade.

This would put Vietnam ahead of Indonesia, whose GDP per capita is projected at US$5,153, making Vietnam the fifth-ranked country in ASEAN by this measure, behind Thailand.

Public investment and foreign capital fuel expansion

Vietnam’s economic momentum has been supported by its emergence as an alternative manufacturing base to China, particularly in high-tech industries such as semiconductors and electronics.

The government has set a target of achieving economic growth of at least 10% in 2026. Real GDP expanded by 9.95% in the third quarter.

Mai Fujita, a senior researcher at the Institute of Developing Economies, attributed much of the momentum to government spending.

"Proactive public investment is a key factor supporting economic growth," she noted.

Foreign direct investment (FDI) inflows rose by 12% year on year to US$21.1 billion during the January-September period. Major international manufacturers, including Taiwan-based electronics giant Foxconn and South Korea's Samsung, have continued expanding their production operations in the country.

Meanwhile, newly registered investment projects surged by 76% to US$50.3 billion, pointing to strong potential for further investment in the years ahead.

Exports surge, widening US trade gap

Vietnam’s export sector has also recorded strong growth, with shipments rising by 25% year on year to US$434 billion during the first nine months of 2026.

Several South Korean companies, including Samsung Electronics, have established manufacturing facilities in Vietnam to produce smartphones and other electronic products for international markets.

US trade statistics also show that the country’s goods trade deficit with Vietnam reached US$160 billion in the first eight months of the year, surpassing its deficits with both China and Mexico.

Vietnam gains ground on Indonesia and Thailand

Indonesia, meanwhile, has attracted substantial investment in its electric vehicle (EV) industry, but its economy continues to expand at around 5% annually.

One concern is that investment in the sector has yet to generate sufficient employment or significantly increase household incomes. A weaker rupiah has also weighed on Indonesia’s GDP per capita when measured in US dollars.

Vietnam is now setting its sights on raising GDP per capita to US$8,500 by 2030, a level comparable to Thailand’s current figure.

Thailand, however, is experiencing much slower economic expansion, with real GDP growth of only around 2% a year. High household debt is among the factors holding back economic activity.

Despite Vietnam’s strong performance, international financial institutions remain cautious about its ambitious growth targets.

Both the IMF and the Asian Development Bank (ADB) project that Vietnam’s economy will expand by around 7.5% in 2027, falling short of the government’s 10% growth ambition.

Fujita stressed that Vietnam must place greater emphasis on sustainable economic development rather than relying solely on short-term expansion.

"Vietnam needs to make efforts focused on long-term growth, such as developing human resources and technology, alongside infrastructure investment that can stimulate growth in the short term," she said.