Vietnam leads 12 major emerging economies in the September 2026 Emerging Markets Tracker, with India falling to second place. India’s strong GDP growth and manufacturing activity were offset by foreign capital outflows, a weak currency and falling stock market capitalisation. Vietnam’s more robust exports and economic growth helped it move ahead.

Vietnam Tops India in Emerging Markets Ranking

With a composite score of 71.8, Vietnam topped the Emerging Markets Tracker for September 2026, which compares 12 developing economies on seven economic indicators.

India came next at 65.1 points, and China was third with 63.5. Malaysia and Indonesia came in fourth and fifth, with scores of 60.3 and 55.7, respectively.

The rankings marked a reversal from August, when India was at the top on the back of economic growth and manufacturing activity.

Here is how the leading economies performed:

The composite score is a function of GDP growth, manufacturing activity, exports, inflation, import cover, currency movement and changes in stock market capitalisation.

Why Did India Lose Its Top Spot?

India’s economic fundamentals remained relatively strong, but its performance on external indicators was weaker than that of several competing economies.

The country posted real GDP growth of 7.8% and a manufacturing PMI of 55.1, indicating continued expansion in economic and factory activity.

However, export growth stood at 23%, well behind Vietnam's 39.5% and China's 36.2%.

Another challenge was inflation. India’s consumer price inflation stood at 5.5%, compared with 5.1% in Vietnam and 0.9% in China.

The weakness was also visible in financial markets. India's stock market capitalisation declined 2.2 per cent in September, whereas Vietnam recorded a 2.7 per cent increase.

These factors collectively affected India’s ranking despite its relatively stronger domestic economic performance.

Vietnam's Economic Growth, Exports Drive Performance

Vietnam’s climb to the top was driven by stronger economic growth, exports and stock market performance.

Real GDP grew 10% YoY, the highest among the 12 economies tracked. The manufacturing PMI remained in expansionary territory at 51.9, while export growth stood at 39.5%.

Vietnam’s currency appreciated 0.6% against the US dollar on a monthly basis.

India, meanwhile, retained a more comfortable foreign exchange reserve position, with an import cover of 10.6 months compared with Vietnam’s 1.9 months.

This difference suggests that although Vietnam performed better in the overall ranking, India had a significantly larger cushion to finance imports.

India's Rank: What Does It Mean for the Economy?

The fall in the ranking comes as India continues to report robust domestic economic activity.

The manufacturing PMI rose to 55.1 in September from 52.8 in August, supported by stronger domestic demand and new orders.

India’s core infrastructure output also grew 7.9% YoY in September. The government estimated Q2FY27 GDP growth at around 7.3%.

However, elevated crude oil prices, foreign capital outflows and exchange rate volatility remain significant challenges.

Continued foreign capital outflows could weigh on valuations and market liquidity in Indian equities despite healthy domestic economic activity.

India's second-place ranking does not indicate a contraction in the economy. Instead, it highlights how changes in export performance, inflation, currency movements and financial markets can influence the relative standing of emerging economies.

Going forward, export growth, capital flows, inflation and currency stability will remain key factors in determining whether India can reclaim the top spot.