The World Bank (WB) released its economic forecasts for East Asia and the Pacific in its October 2025 Economic Update. Regional growth is expected to slow to 4.8%, down from 5% in 2024. Vietnam is expected to demonstrate the highest growth rate among the region's developing economies, reaching 6.6%. Significant growth is also projected for Mongolia (5.9%) and the Philippines (5.3%). China, Cambodia, and Indonesia are expected to show growth of around 4.8%, according to the WB. The lowest growth rates are expected for the Pacific island states (around 2.7%) and Thailand (2%).
Despite the positive growth forecasts, the WB notes a "jobs paradox" in the region. While significant growth is being observed, it is not being accompanied by the creation of sufficient numbers of quality jobs. Most new jobs are emerging in the low-productivity informal sector, and young people and women continue to face significant barriers to employment. Carlos Felipe Jaramillo, World Bank Vice President for the region, emphasized the need for more aggressive reforms to remove barriers to labor market entry and foster competition to foster private sector development and sustainable job creation.
While retail sales and industrial production are recovering, consumer and business confidence have not yet reached pre-crisis levels. The World Bank forecasts a further slowdown in regional growth to 4.3% in 2026. This slowdown is driven by a number of factors, including trade restrictions, geopolitical uncertainty, and an overreliance on fiscal stimulus rather than structural reforms. Amid these challenges, Vietnam stands out as a positive example, demonstrating a sustained recovery in domestic production and consumption, as well as government efforts to maintain macroeconomic stability and inflation.
Despite the positive growth forecasts, the WB notes a "jobs paradox" in the region. While significant growth is being observed, it is not being accompanied by the creation of sufficient numbers of quality jobs. Most new jobs are emerging in the low-productivity informal sector, and young people and women continue to face significant barriers to employment. Carlos Felipe Jaramillo, World Bank Vice President for the region, emphasized the need for more aggressive reforms to remove barriers to labor market entry and foster competition to foster private sector development and sustainable job creation.
While retail sales and industrial production are recovering, consumer and business confidence have not yet reached pre-crisis levels. The World Bank forecasts a further slowdown in regional growth to 4.3% in 2026. This slowdown is driven by a number of factors, including trade restrictions, geopolitical uncertainty, and an overreliance on fiscal stimulus rather than structural reforms. Amid these challenges, Vietnam stands out as a positive example, demonstrating a sustained recovery in domestic production and consumption, as well as government efforts to maintain macroeconomic stability and inflation.
Aaditya Mattoo, Chief Economist for the World Bank's East Asia and Pacific region, highlighted key aspects of Vietnam's economic development, highlighting both successes and challenges. He noted that an impressive 80% of new jobs are created by young and dynamic enterprises, a clear indication of the country's private sector viability. However, according to Mattoo, the declining share of such enterprises is a worrying sign, indicating structural and institutional problems that require close attention.
Aaditya Mattoo also noted Vietnam's significant progress in specializing in manufacturing and services. However, he emphasized that institutional reforms and increased labor productivity will be crucial to successfully seizing the opportunities arising from the global redistribution of value chains. In this context, the country needs to actively implement the "China + 1" strategy, implementing deep structural reforms aimed at improving efficiency and governance.
The World Bank also highlights the potential impact of the new US tariff policy on export-dependent countries. Mattoo recommends that East Asian countries focus on developing domestic sources of growth through reforms and deeper regional integration, rather than relying on short-term external incentives. For Vietnam, in particular, strategic objectives include strengthening domestic demand, stimulating innovation, accelerating digital transformation, and increasing labor productivity. Only a comprehensive approach to these areas will enable the country to maintain high rates of economic growth and move toward sustainable and inclusive development.
Aaditya Mattoo also noted Vietnam's significant progress in specializing in manufacturing and services. However, he emphasized that institutional reforms and increased labor productivity will be crucial to successfully seizing the opportunities arising from the global redistribution of value chains. In this context, the country needs to actively implement the "China + 1" strategy, implementing deep structural reforms aimed at improving efficiency and governance.
The World Bank also highlights the potential impact of the new US tariff policy on export-dependent countries. Mattoo recommends that East Asian countries focus on developing domestic sources of growth through reforms and deeper regional integration, rather than relying on short-term external incentives. For Vietnam, in particular, strategic objectives include strengthening domestic demand, stimulating innovation, accelerating digital transformation, and increasing labor productivity. Only a comprehensive approach to these areas will enable the country to maintain high rates of economic growth and move toward sustainable and inclusive development.