Amid global slowdown, Vietnam is Southeast Asia's economic bright spot

HANOI: In spite of economic challenges felt across the globe due to the fuel disruption stemming from the conflict in the Middle East, Vietnam stands out as a bright spot in Southeast Asia, according to the latest outlook from the Asian Development Bank (ADB), released on Thursday (July 9).

While the ADB downgraded 2026 growth forecasts for Cambodia and the Philippines, Vietnam’s remains unchanged at a strong 7.2%, the highest in the region. For 2027, it remains at 7.0%, making the country the fastest-growing economy in Southeast Asia.

ADB warned, however, that as a whole, the region is facing slowing growth due to supply disruptions, higher commodity and energy costs, and greater geopolitical uncertainty. For the developing nations of Southeast Asia, growth is now expected at 4.6% in 2026 and 4.8% in 2027. Inflation for this year, meanwhile, has been adjusted from 3.2% to 3.9%, with the highest adjustments noted in the Philippines, Cambodia and Thailand.

The region’s biggest loser is the Philippines, noted ADB, which significantly downgraded the growth outlook from 4.4% to 3.8%. The nation’s household spending is down amid higher prices, and climate-related risks remain. 

“Economic growth in developing Asia and the Pacific remains resilient, but persistent headwinds caused by the conflict require a careful policy balance between supporting growth and containing inflation,” ADB Chief Economist Albert Park said.

Singapore is not included in ADB’s classification of developing nations, but is instead among the countries in the Advanced Asia and the Pacific category with economies such as Japan, Australia, and South Korea. Like these other countries, Singapore’s economy continues to face pressures from weaker global trade, higher energy prices, supply-chain disruptions, and tighter financial conditions.

Why Vietnam is doing so well

Vietnam’s strong economic performance amid global pressures may be attributed to a number of factors.

First, its manufacturing sector has had consistently strong output, particularly for export-oriented industries. In spite of slowing demand globally, Vietnam’s exports have continued to remain resilient.

Also, in contrast to the economy of the Philippines, which has experienced delayed investment, Vietnam’s investment has held steady, including foreign direct investment into manufacturing and supply chains, according to the ADB report.

Moreover, the country’s domestic demand has also been consistent, which helps cushion external shocks.

Inflation in Vietnam has also stayed stable, in comparison to close neighbours such as Thailand and Cambodia. /TISG

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