Vietnam’s economy is poised to surpass Thailand’s as the second largest in Southeast Asia, according to a recent report by the Centre for Economics and Business Research (CEBR). The forecast, released this week, projects Vietnam will trail only Indonesia in regional economic output and develop into the world’s 20th largest economy by 2036.
The CEBR report highlights Vietnam’s consistent economic growth, driven by factors including foreign investment, a manufacturing-led export strategy, and increasing domestic consumption. This shift marks a significant change in the economic landscape of the region, traditionally dominated by Thailand.
The broader Southeast Asian region is increasingly characterized by diverging economic and geopolitical alignments, according to a recent analysis by the Lowy Institute. The Institute’s Southeast Asia Influence Index identifies two distinct networks within the region: a continental group comprising Cambodia, Laos, Myanmar, Thailand, and Vietnam, which demonstrates a leaning towards China; and a maritime group with stronger ties to other international partners.
Mainland Southeast Asia, historically known as Indochina, includes Cambodia, Laos, Myanmar, Thailand, and Vietnam, as well as the peninsular portion of Malaysia. The term “Indochina” originated in the early 19th century, reflecting the historical cultural influences of India and China. Yet, “Mainland Southeast Asia” is now the more commonly used term, distinguishing the continental nations from the island nations of Maritime Southeast Asia.
While Thailand has long been a key manufacturing hub and tourist destination, Vietnam has experienced rapid economic development in recent years. The CEBR report suggests this trend will continue, fueled by ongoing structural reforms and increasing integration into global supply chains.
The economic divergence too reflects broader geopolitical trends. The Lowy Institute’s research indicates a growing alignment between the continental Southeast Asian nations and China, while the maritime nations maintain closer ties with other global powers. This division presents complex challenges for regional cooperation and stability.
Singapore, while a small city-state, plays a significant role in the maritime Southeast Asian economy and maintains strong international connections. The region as a whole encompasses a diverse range of political systems, levels of economic development, and cultural identities.
As of July 2019, the combined population of Mainland Southeast Asia was estimated at 243,201,036. The economic implications of Vietnam’s projected growth, and the broader shifts within the region, are currently under review by ASEAN member states.
