Vietnam is on course to surpass Thailand in economic size measured by nominal gross domestic product (GDP) as early as this year, driven by rapid growth and a major state-led infrastructure investment programme, according to a report by Nikkei Asia.
The shift reflects a changing economic landscape in Southeast Asia, where Thailand's growth has been dampened by domestic political uncertainty and rising border tensions with Cambodia. These challenges have weighed on investor confidence and slowed economic momentum in the kingdom.
Vietnam's economy, by contrast, continues to expand at a robust pace.
Real GDP growth for 2025 is expected to be around 8%, and the government has set an ambitious target of more than 10% growth in 2026 and subsequent years.
While some analysts have questioned whether such targets are achievable, Prime Minister Pham Minh Chinh has repeatedly maintained that double-digit growth is within reach, reiterating the point at an economic event in December.
If growth accelerates as planned, Vietnam's nominal GDP could climb into the mid-US$500 billion range by 2026 or 2027. That would allow it to overtake Thailand and potentially become Southeast Asia's third-largest economy, behind Indonesia. GDP per capita would also rise above US$5,000, bringing Vietnam closer to Indonesia's income level.
A key driver of this momentum is nationwide infrastructure development. Public investment plans for 2026 are expected to rise by about 26%, a move that could lift economic growth by around 1.6 percentage points, according to Can Van Luc, chief economist at the state-owned Bank for Investment and Development of Vietnam (BIDV).
Major projects include a new airport near Ho Chi Minh City slated to open in 2026, as well as a China-backed railway project in northern Vietnam that has already broken ground.
Despite the strong outlook, challenges remain. Legal reforms and efforts to cut red tape are still seen as essential to sustaining investment over the longer term. Can Van Luc noted that more than 2,000 investment projects remain stalled due to unresolved regulatory and procedural issues.
Thailand, meanwhile, faces a more subdued outlook. The Organisation for Economic Co-operation and Development (OECD) forecast the country's real GDP growth at just 1.5% in 2026, down 0.5 percentage points from the previous year.
High household debt has constrained domestic consumption, tourism has been slow to recover fully, and US import tariffs have added pressure on the manufacturing sector. In recent years, Suzuki Motor has exited four-wheel vehicle production in Thailand, while Honda Motor has scaled back its output.
Broader regional dynamics are also at play. Southeast Asia, home to about 700 million people, has long been viewed as a key engine of global growth. However, tensions along the Thailand–Cambodia border have intensified since May and escalated into heavy fighting in December, disrupting trade and weighing on tourism.
Kang Wu, a visiting scholar at Boston College, said geopolitical stability remains critical to the region's economic prospects. He warned that the Thailand–Cambodia border conflict could make foreign investors more cautious and risk drawing Southeast Asia deeper into wider US–China strategic rivalries.
