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Thursday, June 13, 2024

Fitch Ratings predicts stable outlook in Vietnam

The Saigon Times

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HCMC – Fitch Ratings has raised Vietnam’s long-term foreign-currency issuer default rating (IDR) from BB to BB+ while anticipating a “stable” outlook for the country.

This credit rating agency predicted that Vietnam’s economic growth this year will reach around 7%, driven by strong foreign direct investment (FDI) inflows and a plentiful labor force.

Fitch Ratings believed that potential economic challenges arising from stresses in the property sector, weak external demand, and policy implementation delays due to an anti-corruption campaign are unlikely to hinder the country’s medium-term macroeconomic prospects. Vietnam has adequate policy buffers in place to effectively manage short-term risks.

Vietnam’s active participation in regional and global Free Trade Agreement (FTA) networks, along with supply chain diversification and the elevation of its relationship with the U.S. to a comprehensive strategic partnership, will continue to enhance its attractiveness for FDI.

Moreover, Vietnam’s foreign exchange reserves have improved, reaching US$89 billion as of end-September 2023, following a significant drop in 2022. This improvement partly reflects the return of capital flows and a larger trade surplus, with expectations of further improvement in the reserves in 2024-2025.

Fitch Ratings valued Vietnam’s significantly lower level of government debt compared to countries with similar ratings as one of the factors that contribute to its positive profile.

They anticipate that with the continued implementation of growth-boosting and macroeconomic stabilization policies by the Vietnamese Government, the country’s economy will regain its growth momentum.

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