Vietnam is anticipated to be the fastest-growing economy in Southeast Asia over the following decade, based on the report “Navigating High Winds: Southeast Asia Outlook 2024-34,” published in early August.
The report, a collaboration between the Development Bank of Singapore (DBS), Bain & Company and the Angsana Council, forecasts the performance of the region’s six major economies: Vietnam, Singapore, Malaysia, the Philippines, Indonesia and Thailand.
The report projects that Southeast Asia will see faster economic growth over the following decade, with GDP and foreign direct investment (FDI) surpassing China’s. This growth shall be driven by a stronger domestic economy and increased investment resulting from the “China + 1” supply chain shift.
The region is anticipated to grow at a median rate of 5.1 percent per 12 months.
Vietnam and the Philippines are expected to be the fastest growing countries, with Vietnam remaining within the lead. According to the report, Vietnam will maintain its GDP growth rate at approx 6.6% in 2024–2034exceeding the regional average.
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Over the past 30 years, GDP growth in Southeast Asia has been moderate, with Vietnam leading the region.
Vietnam’s growth is driven by positive aspects reminiscent of an export-oriented economy well-positioned to capitalize on China+1 opportunities, diverse FDI sources, productive inter-provincial competition, and a high-quality labor force and education system.
While Vietnam is anticipated to stay a pacesetter in Southeast Asia, its position will not be as strong as initially forecast in 2022. The impact of the anti-corruption campaign, political uncertainty and credit weakness have dampened its prospects.
Initially export-oriented and centered on industrial parks, Vietnam’s economy was seen as immune to a domestic slowdown. However, the anti-corruption campaign has slowed growth, hampering infrastructure development, investment approvals and creating challenges for joint ventures. Moreover, energy shortages and increased competition have further compounded the challenges facing Vietnam.
About the Report
To develop the forecasts on this report, DBS used data on total factor productivity, capital growth, labor force and human capital from CEIC, IMF and Penn World Table, in addition to the expertise of the Angsana Council, Bain and DBS.
Growth rankings are based on external indexes and rankings from Euromonitor, OECD, Trading Economics, UN, UNCTAD, World Bank and WTO, and in addition consider the Herfindahl-Hirsch index
Read the complete report Here.
