What: Southeast Asia's economic performance in Q4 2024 shows regional stability amid external challenges, with Vietnam leading at 7.55% growth while maintaining robust retail and tourism sectors.

Why it is important: The varied performance across markets highlights opportunities for retail expansion, with Vietnam's retail market projected to reach USD 350 billion by 2025 and Thailand emerging as a luxury retail powerhouse.

Southeast Asian economies demonstrated remarkable resilience in the fourth quarter of 2024, with most countries achieving growth rates of 5% or higher. Vietnam led the region with an impressive 7.55% expansion, while Thailand's growth accelerated to 3.2%. The region's core growth drivers remained steady, with particularly strong investment flows and stable consumption patterns. Private consumption showed resilience across most markets, supported by improving labour markets and moderating inflation. The retail sector's transformation was evident through significant developments, including major infrastructure projects and digital integration initiatives. Tourism recovery played a crucial role in driving growth, especially in Thailand and Singapore, where retail sales showed strong correlation with visitor arrivals. Despite these positive indicators, regional currencies faced pressure against the US dollar, prompting several central banks to implement strategic rate adjustments to maintain economic stability.

IADS Notes: Recent developments underscore Southeast Asia's retail transformation. In February 2024, Central Retail announced a USD 665 million investment in AI integration and ecosystem development, while November 2024 saw MM Mega Market commit USD 20 million to Vietnam's expanding market. Thailand's emergence as a luxury retail hub was evidenced by the USD 3.2 billion One Bangkok project in October 2024, while Singapore's January 2025 retail performance showed strong digital integration with online sales reaching 13.3% of total revenue. These investments reflect growing confidence in the region's retail potential, despite varying market conditions.

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