Is Vietnam becoming the new Thailand ?
Despite COVID-19 and global trade tensions, Vietnam’s exports and current account surplus continue to grow.
If we go back to the year 2015, Thailand was in the midst of a major export boom, running a current account surplus of $28 billion. The following year the surplus jumped to $43 billion. Thailand maintained these large current account surpluses, anchored by exports of agriculture, manufactured goods, and services, right up until the COVID-19 pandemic.
As I have previously noted, an economy based around exports like Thailand’s is especially vulnerable to external shocks that disrupt normal patterns of travel and commerce, like pandemics or trade wars. Even now, Thailand is struggling with a slow recovery in exports that has contributed to the country’s weak economic growth. In 2024, the current account surplus was $11 billion, which is fine for many countries but maybe not ideal for Thailand.
We could explain this by saying that today’s global economy is not very friendly for countries that depend on external demand, so of course Thailand is struggling. Any export-led economy would be. But there is a puzzle here, because there is another country in the same region that is achieving rapid economic growth through export-led industrialization, just as Thailand did. And this country is seeing its exports and current account surplus rise, despite the pandemic and trade tensions. This country, of course, is Vietnam.
In 2015, Vietnam was running a deficit in its current account of negative $2 billion. According to the Atlas of Economic Complexity, Vietnam’s total exports that year were $181 billion, $94 billion less than Thailand. Within a couple years, the roles had switched. In 2023, Vietnam exported over $400 billion in goods and services, surpassing Thailand’s $345 billion. Vietnam ran a $28 billion surplus in its current account in 2024, and the economy is experiencing steady growth despite global economic headwinds.
Even in tourism, where Thailand has reigned supreme for many years, Vietnam is catching up. While Thailand still leads in absolute numbers, inbound travel remains below its pre-pandemic peak and it looks like arrivals will be lower this year than they were last year. Vietnam, on the other hand, is poised to set new records for inbound tourists this year.
I want to be clear that a surplus in the current account does not mean one economy is performing better than another. Whether a country runs a surplus or deficit is less important than why. In this case both Vietnam and Thailand have built their economies around similar models of export-led industrialization with the explicit goal of exporting surplus production, so comparing them can provide useful insights.
Foreign investors like to offshore their manufacturing to Vietnam and Thailand to take advantage of lower production costs. The goods they produce are then exported to global markets. Exports are a major goal of this type of development so a surplus in the current account is evidence that the model is working. That’s why it is interesting that Vietnam seems to be overtaking Thailand at a time of heightened geopolitical uncertainty and weakening global demand. Why might this be the case?
Part of the answer could be that it’s cheaper to make things in Vietnam. Due in large part to the success of its export-led industrialization strategy, Thailand has a higher per capita GDP than Vietnam. This means basic manufacturing inputs like wages and electricity are likely to be costlier due to Thailand’s relatively higher level of development.
Another consideration is the composition of exports. Back in 2015, Vietnam’s primary exports were divided between electronics, textiles, and agriculture. By 2023, exports had overwhelmingly shifted toward higher-value products such as phones, integrated circuits, and computers. This is typical with export-led industrialization as countries move away from lower value-added goods like agriculture and textiles, and toward more valuable goods.
In Vietnam, textiles and agriculture fell from 38 percent of exports in 2015 to 28 percent by 2023, as the country shifted toward more advanced manufactures. In particular, Vietnam is seeing a big boom in the electronics industry, exporting $165 billion of electronic goods in 2023, equal to 41 percent of total exports. By comparison, Thailand exported $48 billion worth of electronics in the same year.
Vietnam also benefits from close proximity to large nearby markets like China and South Korea. A lot of demand for Vietnamese electronics comes from those two countries, as firms like LG, Samsung, and Xiaomi have invested billions setting up factories with an eye toward exports. This has trickled down to service exports as well. A little under half of Vietnam’s 17.5 million inbound tourists last year were from South Korea and China.
Thailand’s exports are more evenly spread across a range of goods and services including electronics, machinery, agriculture, tourism, chemicals and vehicles. While this should provide a more stable industrial base, I think it also makes Thailand more exposed to a general weakening of global demand. Lack of political stability can also reduce investor confidence, so Thailand is doing itself no favors with its revolving door of prime ministers.
When we look at these two cases we see that Vietnam has been very successful as shifting from agriculture and textiles toward a narrower specialization in electronics which is a good business to be in right now. This, along with lower costs, a strategic location and a stable political environment, can help explain why Vietnam is catching up to Thailand so quickly in the export-led industrialization game. The next question for a future column is whether this is sufficient to sustain such a high rate of growth over the long-term and in an increasingly uncertain global economy.
By James Guild – The Diplomat – September 09, 2025