With growth rates that could steady at 6.5% over the next decade, Vietnam's economy could surpass that of Singapore by 2029, according to a report by a Singaporean bank.
Increased foreign investment, a stable economic plan and the looming trade war between China and the US are all cited as reasons for the potential overtaking in a research note released earlier this week by Singapore-based DBS bank. Currently, Vietnam's economy sits at US$224 billion which is 69% that of its Southeast Asian peer.
Singapore is currently growing at a rate of 2.5% a year. Although the size of Vietnam's economy might be larger than Singapore's in a decade, its population is also more than 15 times that of the island nation, meaning Vietnam's per-capita GDP still needs decades to catch up to its neighbor.
Vietnam's emergence as ASEAN's second largest exporter of electronic goods; a young and educated population; infrastructure investments; and ongoing, albeit slow, reforms all contribute to the positive prognostication. And while some foreign companies are already moving operations from China to Vietnam thanks to a lower average wage and laxer regulations, the trade war between China and the US is expected to have an impact. The tariff-laced standoff makes Vietnam an attractive place to invest for both nations.
The prediction by DBS is in line with similar other forecasts for Vietnam's sustained economic surge including recent reports released by the World Bank and the National Financial Supervisory Commission (NFSC). The gains are expected to have a significant effect on living standards with average income possibly hitting US$10,000 by 2030.
Experts do not interpret the news as worrisome for Singapore, however. In addition to being a more mature economy with the highest GDP per capita in ASEAN, the country stands to gain from Vietnam's successes as a regional partner.
