In a recent report by the Centre for Economics Business Research (CEBR), the economic landscape of Thailand and Vietnam has come under scrutiny, revealing stark contrasts in growth trajectories that have significant implications for both nations. As Thailand grapples with stagnation, Vietnam is poised for a dramatic rise in global economic rankings, prompting discussions about the future of Southeast Asia's economic power dynamics.
According to the CEBR's 2025 report, by the year 2039, Vietnam's economy is projected to ascend to the 25th spot globally, up from its current 34th place in 2024. In stark contrast, Thailand is expected to remain stagnant at its current 31st position. This shift indicates that Vietnam could potentially overtake Thailand as the second-largest economy in Southeast Asia, a position Thailand has held for decades.
Historically, Thailand has fluctuated in global rankings, having been 31st in 2009 and 2014, peaking at 23rd in 2019 before sliding back down to its current position. Meanwhile, Vietnam has consistently improved, moving from 51st in 2009 to its current ranking. The BBC Thai reported that under Prime Minister Prayuth Chan-o-cha's administration, Vietnam has surpassed Thailand in several key economic metrics, including foreign direct investment (FDI), exports, and trade agreements.
The CEBR report highlights that Vietnam's economy grew by an impressive 7.09% in 2024, while Thailand's GDP growth was a mere 2.5%. This trend continues across various sectors, with Vietnam's private consumption growing by 7.54% compared to Thailand's 3.4%, and exports increasing by 14.3% in Vietnam versus 5.8% in Thailand. Even the manufacturing sector in Vietnam saw an 8.4% growth, while Thailand's manufacturing shrank by 0.5%.
One of the critical factors contributing to Vietnam's economic success is its ability to attract foreign investment. In 2024, Vietnam secured approximately $25 billion in FDI, significantly outpacing Thailand's $10 billion. This foreign investment influx is partly due to multinational companies relocating their manufacturing bases from China to Vietnam, seeking more competitive labor costs and favorable trade conditions.
In terms of labor markets, Thailand's unemployment rate stood at 0.88% in the last quarter of 2024, while Vietnam's was slightly higher at 2.22%. However, the tightness of the labor market in Vietnam has led to increased consumer spending, further stimulating economic growth.
The CEBR report also points out that Thailand's economy remains vulnerable to external shocks, such as geopolitical tensions and potential import tariff increases from the United States. Furthermore, the report raises concerns about Thailand's labor market, particularly among new graduates and the prevalence of informal employment, especially in agriculture and services.
In response to these challenges, analysts suggest that Thailand should diversify its economic base and reduce reliance on tourism, which has been a significant driver of its economy. They recommend lowering high private sector debt levels and enhancing productivity through technological advancements.
To better understand the underlying factors driving Vietnam's economic growth, one must look at the structure of its economy. According to data from the Vietnamese government, the service sector accounts for 42.36% of its economy, followed by industry and construction at 37.64%, and agriculture at 11.86%. This diversified economic structure has positioned Vietnam favorably for sustained growth.
In comparison, Thailand's economy is heavily reliant on tourism, which has faced significant challenges due to global disruptions and changing consumer preferences. The CEBR report suggests that Thailand needs to adapt to these changes by promoting its exports and enhancing the quality of its products.
Moreover, the CEBR's findings are echoed in the Global Innovation Index (GII) 2024, where Thailand ranks 41st and Vietnam 44th. However, when it comes to high-tech exports, Vietnam has taken the lead, ranking first globally, while Thailand sits at seventh. This illustrates Vietnam's growing capabilities in technology and innovation, crucial for future economic competitiveness.
In a separate initiative, the Thai government is launching the 'DurianAI' project, aimed at enhancing the income of farmers by leveraging artificial intelligence to connect them with major buyers. Warawat Aueapinyakul, chairman of the subcommittee on agricultural product promotion, stated that the project will help improve the quality of durians and other agricultural products by establishing market standards and utilizing AI for data management.
This initiative reflects a broader trend in Thailand's agricultural sector, which is seeking to modernize and increase productivity through technology. By providing farmers with knowledge and tools to meet market demands, the 'DurianAI' project aims to boost farmers' incomes and stabilize the agricultural economy.
As Thailand navigates its economic challenges, the contrasting trajectory of Vietnam serves as a cautionary tale. The need for strategic reforms, investment in technology, and a focus on diversifying the economy has never been more critical. With Vietnam poised to overtake Thailand in economic rankings, the question remains: can Thailand adapt quickly enough to reclaim its position as Southeast Asia's economic leader?
In conclusion, the economic rivalry between Thailand and Vietnam highlights the dynamic nature of global markets and the importance of innovation and adaptability in securing future growth. As both nations strive to enhance their economic prospects, the lessons learned from this competition will shape the region's economic landscape for years to come.
