Vietnam set to be the outperformer of the ASEAN-6: Oxford Economics

According to a new report released by Oxford Economics -  the world's foremost independent economic advisory firm, Vietnam's economy will be the standout among the ASEAN-6, growing at a faster pace relative to its peers during the next few years.

The report noted that Vietnam’s gross domestic product (GDP) growth will reach 6.7 per cent this year and 6.5 per cent next year, driven by a strong manufacturing sector and a rapid recovery in domestic demand.  In which, manufacturing fundamentals remain strong and supported by structural tailwinds.

A key source of growth for Vietnam next year will be its manufacturing exports. Vietnam is a known assembly, packaging, and testing (APT) hub, the next stage of the chip-making process postfabrication. Intel's largest APT facility is in Vietnam, and Amkor Technology's $1.6 billion chip plant in Bac Ninh province is set to come on line in 2025.

Other large exporting sectors are machinery and electrical appliances, textiles, and agriculture. A boost should come from the front-loading of export orders next year in anticipation of tariffs, which may be sufficient to offset soft electronics demand in the near term.

According to Oxford Economics, growth in FDI inflows will continue to be maintained, although at a slower pace. It expects investment growth in 2025 to reach 7.2 per cent, higher than the 6.9 per cent forecast for this year.

The report also noted that the domestic sector in Vietnam, in private consumption and domestic businesses, is steadily recovering. While credit growth is not likely to return to pre-Covid levels in 2025.

In addition, the tourism sector is expected to continue being an important driver of economic growth in 2025, although its contribution may decrease compared to 2024. The report also highlights an important point about Vietnam's tourism industry: in 2023, the tourism sector accounted for 6.6 per cent of Vietnam's GDP, helping the country rank second in Asia, just behind Japan, in terms of benefiting from the strong recovery of this sector.