Vietnam set to become Southeast Asia’s second-largest economy by PPP: IMF

The IMF has released its latest forecast on the economic size of six major Southeast Asian economies from 2026 to 2031, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Under this outlook, Vietnam’s gross domestic product (GDP) measured by PPP is expected to reach US$2.025 trillion in 2026, surpassing Thailand, Malaysia, the Philippines, and Singapore, and ranking second only to Indonesia, whose economy is forecast at $5.230 trillion.

Vietnam is also projected to be the only country besides Indonesia to exceed the $2 trillion mark that year.

The gap between Vietnam and Thailand is forecast to widen further in the following years.

By 2031, Vietnam’s PPP-based GDP is projected to exceed Thailand’s by more than $500 billion, pulling well ahead of Malaysia and the Philippines and consolidating its position as the second-largest economy in ASEAN.

Although Vietnam is still lagging behind Indonesia, it is expected to be the fastest in the region at narrowing the gap, with its economy rising from about 39 percent of Indonesia’s size in 2026 to nearly 46 percent by 2031.

Vietnam is also projected to significantly outpace Singapore in economic size, with its PPP-based GDP calculated to be more than 2.2 times larger by 2031, reflecting advantages in population scale and growth momentum, while Singapore is set to remain the clear leader in per capita income.

PPP is derived from the World Bank’s International Comparison Program, which uses global price benchmarks to compare living costs across countries and determine how much money is needed to purchase the same goods in different economies, said Dr. Nguyen Anh Vu, head of the finance faculty at the Ho Chi Minh City University of Banking. 

He said the IMF’s projection that Vietnam will surpass Thailand to become Southeast Asia’s second-largest economy by PPP in the 2026–31 period is reasonable.

He explained that historically, Thailand’s economy was far larger than Vietnam’s, but the gap has narrowed significantly as Vietnam has maintained stronger growth over a prolonged period.

In 2006, Thailand’s nominal GDP stood at over $220 billion, compared to just over $66 billion for Vietnam.

By 2024, Thailand’s nominal and PPP GDP reached nearly $530 billion and $1.770 trillion, respectively, while Vietnam’s figures rose to nearly $480 billion and $1.650 trillion.

However, Dr. Vu cautioned that surpassing Thailand in economic size does not mean Vietnam has overtaken it in overall development, as living standards are better reflected by GDP per capita.

By this measure, Vietnam still lags behind Thailand.

In 2024, Thailand’s nominal GDP per capita was nearly $7,350, compared to about $4,720 for Vietnam, while PPP-based GDP per capita stood at over $24,710 for Thailand and $16,385 for Vietnam.

The gap partly reflects population differences, with Vietnam’s population exceeding 100 million compared to around 70 million in Thailand.

Dr. Vu likened this to two families with the same income but different numbers of members, noting that the smaller family would enjoy a higher standard of living.

Still, he said the IMF’s projection that Vietnam will surpass Thailand and other regional peers to become Southeast Asia’s second-largest economy by PPP marks a significant milestone, reflecting years of sustained high growth, reinforcing Vietnam’s position in the region, and providing a solid foundation for the next phase of economic expansion.