Thailand's Economy Wanes as Vietnam Eyes GDP Overtake in 2026
Thailand's economy faces a critical downturn in 2026 due to U.S. tariffs and a strong baht. Explore how Vietnam is poised to overtake Thailand as a regional power.
The economic guard in Southeast Asia's is shifting. Thailand's long-standing dominance is under threat as its central bank warns of waning competitiveness against a tide of U.S. tariffs, crippling household debt, and a surging currency. Meanwhile, Vietnam is charging ahead, on track to potentially overtake its neighbor as soon as this year.
Thailand Economy Forecast 2026: Double Blow from Tariffs and Baht
According to Reuters, the Bank of Thailand reported that the strong baht—which gained over 10% against the dollar last year—will severely weigh on 2026 exports. Compounding this is the 19% U.S. tariff implemented in August, which is just beginning to exert its full pressure on the nation's industrial heartland.
The World Bank recently slashed Thailand's growth projection to just 1.6% for 2026. This stagnation is a far cry from the 4.1% growth recorded in 2018. Political uncertainty adds another layer of risk, with a highly unpredictable snap general election set for February 8.
The Rise of Vietnam: A New Regional Leader?
While Thailand's tourism target was cut to 32 million arrivals, down from 40 million in 2019, Vietnam is breaking records. Hanoi announced a staggering GDP growth of 8.02% in 2025. Nikkei Asia reports that Vietnam's nominal GDP could reach the $500 billion level by 2027, surpassing Thailand.
| Metric | Thailand (2026 Forecast) | Vietnam (2025 Actual) |
|---|---|---|
| GDP Growth | 1.6% | 8.02% |
| U.S. Tariff | 19% | 20% |
| Foreign Tourists | 32 Million | 21 Million (Record High) |
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