If gross domestic product (GDP) growth, manufacturing activity, contained inflation and comfortable import cover are India’s muscle, the rupee and stock markets are proving to be its Achilles’ heel.
These external vulnerabilities have repeatedly prevented the country from claiming the top position on Mint’s Emerging Markets Tracker more consistently. As India grapples with these weaknesses, Vietnam—newly added to the tracker—has emerged as a formidable challenger.
Vietnam has claimed the top spot in three of the past four months, marking a strong debut on the tracker. However, over a longer horizon India retains a narrow lead. Over the past 12 months, India ranked first six times compared with Vietnam’s five.
The contest between India—an established emerging market giant—and Vietnam—an increasingly prominent emerging economy—has therefore become one of the most closely watched dynamics in the tracker.
Launched in September 2019, Mint’s Emerging Markets Tracker compares major emerging economies using seven high-frequency indicators: real GDP growth, manufacturing PMI, export growth, retail inflation, import cover, exchange rate movements and stock market performance.
The tracker, which originally tracked 10 major emerging market economies, now includes Vietnam and South Africa as well, taking the total count to 12, and widening the analytical framework to better capture shifts in the emerging market landscape.
The rankings in this analysis map the performance of these economies based on the updated tracker over the past 12 months.
January gauge
A 0.9% month-on-month depreciation in the rupee and 1.79% m-o-m decline in stock market capitalization kept India at the fifth rank in January 2026. Its stock market performance was the worst during the month, and the rupee trajectory was the second-worst among the 12 EM peers.
Despite this setback, India has partially recovered from its recent low of ninth place in December 2025.
Vietnam, in contrast, retained strong momentum. The economy posted GDP growth of 8.0%, export growth of 30% and a sharp 9.9% increase in stock market capitalization. Its currency appreciated by 0.4% against the dollar, though this gain was modest compared with several other emerging markets.
While South Africa, Malaysia, and China also left India behind in January to claim second, third and fourth spots, respectively, they have not been a consistent contender for the top spot like Vietnam.
India has been facing multiple headwinds since at least August 2025, which have weighed on both the rupee and equity markets. Among the key pressures have been the United States’ 25% additional penalty on purchases of Russian oil, valuation concerns related to stock markets, worries over weak earnings, and slow nominal GDP growth
The outlook has become even more uncertain in recent months, as geopolitical tensions in West Asia threaten to intensify India’s external vulnerabilities.
Future risks
Escalating tension in West Asia, with Iran’s retaliation choking oil and gas supplies from Gulf countries, is threatening to weaken India’s external position even further.
The rupee has crossed the 92-dollar mark, weakening 1.4-1.5% more from the average levels seen in January. Brent crude prices breached $100 per barrel before settling around $90. This indicates an over 30% increase this year so far, worsening the current account position by 40 basis points per 10% rise in crude oil, inflation by 30-50 basis points, and GDP growth by 15 basis points, economists estimate.
However, India is not alone in facing these vulnerabilities—the conflict is expected to shave off 40-80 basis points from Vietnam’s GDP growth and could reduce exports by 2-5%. Both countries, which are heavily dependent on West Asia to meet their energy needs, are scrambling to manage the shortage or potential shortage of fuel.
India has restricted gas supply to industrial and commercial segments, while Vietnam has advised businesses to allow employees to work from home to reduce fuel consumption. Similar steps are being taken, or are being mulled, by several other emerging markets that are vulnerable to the shocks.
An analysis by Nomura, in a report dated 1 March, showed that many Asian emerging markets were vulnerable to the Iran war. It identified Thailand, India, Indonesia, and the Philippines among the most vulnerable. While China is expected to have a limited impact, it has also asked companies to reduce the export of diesel and gasoline to prioritize domestic energy security.
India vs Vietnam vs China
After recording stellar growth for decades, China has slowed down significantly in recent years, marred by weak domestic consumption. The dragon is now even aiming for slower growth (4.5% to 5%) as opposed to 5% in the preceding three years and 6-6.5% or more before that.
While China’s dominance in GDP size and trade supremacy is unmatched, the country’s apparent shift towards high-quality growth from high-speed growth has made it a mediocre performer on the tracker. India secured first or second rank between March 2025 and September 2025, before external vulnerabilities caught on, leaving it struggling for the top rank.
Vietnam, on the other hand, maintained 7-8% GDP growth, double-digit export growth, largely expanding manufacturing activity, and volatile but decent currency and stock market performance, making it a deserving contestant on the list. To be sure, Vietnam is still a small economy—about one-eighth of India and merely a fraction of China—but its rapidly rising status, particularly as a valuable alternative to Beijing for investments, is worth tracking.