It is expected to lead the world in GDP growth in the coming decade, according to Harvard University research program Growth Lab.
“Vietnam and China remain more complex than expected for their income level, and so they will continue to lead global growth in the coming decade,” Ricardo Hausmann, director of the Growth Lab and a professor at the Harvard Kennedy School, said.
“Countries that have diversified their production into more complex sectors are those that will lead global growth.”
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Chips developed by Vietnamese engineers. Photo by VnExpress/Luu Quy |
The expected growth of these economies are driven by their sophisticated and diverse manufacturing capabilities, Growth Lab said in a recent report.
One of the growth drivers is manufacturing. Vietnam’s manufacturing sector recorded its strongest growth in four months in February, supported by faster production and a rise in new orders, according to S&P Global.
The S&P Global Vietnam Manufacturing Purchasing Managers’ Index climbed to 54.3 in February from 52.5 in January, extending the sequence of improving business conditions to eight consecutive months. A figure above 50 signals expansion.
Factory output rose sharply during the month, with the pace of growth reaching a 19-month high. Firms said they are ramping up production in advance of client deliveries and responding to firmer customer demand.
New orders increased for a sixth straight month, expanding at the quickest rate since October 2025. The gain came even as new export business was unchanged from January, with some companies citing volatility in overseas markets.
Some firms reported hiring additional staff on a temporary basis. Purchases of inputs rose at the second fastest rate in 18 months behind only December 2025.
U.K. market data tracker FTSE Russell also highlighted Vietnam’s economic potential in a recent report.
On a GDP per capita basis, Vietnam surpassed the Philippines in 2018 to rank fifth among ASEAN member countries after Singapore, Malaysia, Thailand, and Indonesia, it said.
“The high growth can be attributed to the country’s continuous reform efforts over the past decades.”
In recent decades the country has posted strong growth compared with other major ASEAN members, underpinned by structural reforms and robust foreign direct investment, it said.
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Since 2019, electronics and machinery have replaced textiles as the leading export category, as global technology companies expanded their operations in the country.
The transition has deepened Vietnam’s integration into global value chains and supported continued trade surpluses since 2018, bolstering macroeconomic stability alongside relatively low fiscal deficits and government debt levels.
Vietnam’s capital markets have expanded swiftly in line with economic growth.
The market capitalisation of the FTSE Frontier Vietnam Index increased from US$11 billion in 2015 to $59 billion in 2025, outperforming both frontier and emerging market benchmarks.
Although economic growth has been driven by manufacturing, the stock market remains heavily weighted toward domestically focused sectors.
Real estate and financials account for more than 60% of total market capitalisation, reflecting structural trends including urbanisation, industrial development, rising incomes, and credit expansion.
FTSE Russell’s planned upgrade of Vietnam to Secondary Emerging Market status in 2026 is expected to draw additional institutional inflows and enhance market liquidity, providing investors with exposure to Vietnam’s long-term growth trajectory, albeit primarily through domestically oriented industries.
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Long Thanh International Airport in southern Vietnam, August 2025. Photo by VnExpress/Phuoc Tuan |
Southeast Asia’s industrial engine, tourism hub
Vietnam is also hailed as one of the leading industrial ecosystems in Southeast Asia, with exports in 2024 being worth $403 billion and only behind Singapore’s $504 billion, according to Singaporean research firm Andaman Partners.
Vietnam is “the standout high-tech engine,” with machinery and electronics dominating exports and driving a 4.2% compound annual growth rate in total export growth between 2014 and 2024, it added.
Vietnam is also posting strong numbers in tourism, recording the highest growth rate in international tourist arrivals in Southeast Asia last year of 20.4%, according to data from the ASEAN Secretariat.
It received 21.2 million foreign visitors in 2025 and targets 25 million this year.
Its growth rate was well ahead of other major tourism destinations Malaysia (up 11.2%), Indonesia (10.4%) and Singapore (2.7%), while long-time star Thailand actually saw numbers decline by 7.2%.
