In 2025, Viet Nam recorded the highest GDP growth among the six major Southeast Asian economies, reaching 8.02 percent, far above the regional average. By comparison, Indonesia grew by 5.11 percent, Malaysia by 5.2 percent, the Philippines slowed to 4.4 percent, while Thailand recorded only 2.4 percent.
Over the past decade, Viet Nam has maintained an average annual growth rate of 6.2 percent, compared to the ASEAN average of just 4.9 percent. That consistency is what sets it apart from its neighbors.
At least three key foundations help explain why Viet Nam is not merely benefiting from temporary luck, but is instead harvesting the results of structural choices made years ago.
1. The New Factory of the World
As the US-China trade war forced multinational companies to rethink their supply chains, Viet Nam emerged as one of the primary destinations.
The “China+1” strategy brought a massive influx of investment, as Viet Nam offered a combination that was difficult to match: low production costs, political stability, and broad market access through its extensive network of trade agreements.
Realized FDI in 2025 reached US$27.6 billion, the highest level in the past five years and up 9 percent from the previous year. By the end of 2024, Viet Nam hosted 42,002 active FDI projects with total registered capital amounting to US$502.8 billion. Manufacturing remained dominant, with the processing and manufacturing sector absorbing 62.5 percent of total incoming FDI.
Major global corporations have established a strong presence in the country for years. Samsung alone has invested US$23.2 billion, turning Viet Nam into its main smartphone production hub, which generated US$54.4 billion in exports in 2024.
Foxconn, LG, Intel, and Pegatron followed, transforming northern Viet Nam into the largest electronics cluster in Southeast Asia. Electronics now account for more than 30 percent of Viet Nam’s total exports, equivalent to more than US$72.6 billion in 2024.
2. Young and Affordable Human Capital Base
Viet Nam has a population of 102 million, and its demographic structure is currently at its most productive stage. The working-age population (15–59 years old) still accounts for 62.7 percent of the total population, indicating that Viet Nam remains in the midst of a demographic bonus period. Out of a labor force of more than 51 million people, 58 percent are under the age of 35.
This is not only about numbers, but also about cost and capability. The minimum wage in Hanoi and Ho Chi Minh City is only around US$196 per month, far lower than in China or Thailand.
At the same time, the literacy rate has reached 94.5 percent, surpassing the global average of 83.5 percent. An educated yet relatively low-cost workforce has become a key factor driving investors to choose Viet Nam over neighboring countries where labor costs are already significantly higher.
The government has also begun pushing to increase the value-added capacity of its workforce. Viet Nam aims to train 50,000 semiconductor engineers by 2030, with local universities starting to open chip design programs to attract investment from Japan, South Korea, and the United States.
3. Open Trade as the Backbone
Viet Nam is one of the world’s most open economies relative to its size. The country’s total trade value surpassed US$930 billion in 2025, up 18.2 percent from the previous year. The United States became Viet Nam’s largest export market, with exports reaching US$153.2 billion and generating a trade surplus of US$134 billion.
This openness is supported by an extensive network of free trade agreements. Viet Nam is part of the RCEP, which covers markets representing 30 percent of the world’s population, in addition to bilateral FTAs with the European Union. As a result, export-oriented sectors dominated by foreign companies accounted for nearly 76 percent of Viet Nam’s total exports in 2025.
This growth, however, does not come without risks. Viet Nam’s trade deficit with China reached US$115.6 billion in 2025, highlighting its heavy dependence on imported upstream components. Port infrastructure and energy supply also remain significant bottlenecks.
Even so, Viet Nam has so far demonstrated that policy consistency, favorable demographics, and geopolitical momentum can combine to create a growth engine that is difficult for the region to match.
