Vietnam, Thailand Face Divergent Economic Paths in 2025

Vietnam and Thailand are charting distinct economic courses in 2025, with Vietnam capitalizing on robust export growth and Thailand grappling with inflation and domestic challenges, according to recent economic data and analyst reports.

Vietnam's Export Surge

Vietnam's economy saw a significant boost in April, with export growth surging by 19.8% year-on-year, driven by frontloading to the U.S. market amid a 90-day tariff reprieve. However, manufacturers remained cautious, as evidenced by a slower output growth of 10.8% and a sharp decline in the Purchasing Managers' Index (PMI) to 45.6.

Retail sales in Vietnam reached a two-year high, climbing 11%, although this momentum may be short-lived due to impending U.S. tariff increases. Inflation held steady at 3.1% despite the uptick in consumer spending. Analysts maintain a full-year GDP growth forecast of 5.9% for Vietnam, with projections ranging from 5.2% to 8% across various sources.

Thailand's Inflation Woes

In contrast, Thailand's inflation rate turned negative, dropping to a 13-month low of -0.2% in April, primarily due to lower energy costs. The Bank of Thailand has revised its 2025 inflation forecast to around 1%, a decrease from earlier projections.

To stimulate economic activity, the Thai cabinet has approved a 500 billion baht ($13.5 billion) handout, aiming to boost overall economic growth rather than targeting specific vulnerable groups. This initiative comes as Thailand's GDP growth is projected to range between 2.05% and 2.7% for 2025, reflecting global uncertainties and domestic economic headwinds.

Divergent Strategies

Vietnam's economic strategy focuses on export-driven growth, leveraging strong global demand and strategic trade agreements. The country is also investing heavily in digital infrastructure and e-commerce to support economic expansion.

Thailand, on the other hand, relies on domestic consumption and tourism as key economic drivers. The government is implementing fiscal stimulus measures and infrastructure investments to bolster growth amidst a challenging global economic environment.

Outlook and Challenges

Both countries face unique challenges that will shape their economic trajectories in 2025. Vietnam must navigate potential U.S. tariffs, while Thailand contends with global trade uncertainties and domestic economic stagnation.

Investors and policymakers are advised to closely monitor these developments, as the economic policies and challenges faced by Vietnam and Thailand will significantly impact their growth prospects and regional economic dynamics.

WF News