Fitch Says Vietnam Economy on Strong Footing

Vietnam’s economy is on a more positive growth momentum than last year, with strong foreign direct investment capital inflows, increased foreign exchange reserves and strictly controlled foreign debts, according to Fitch Ratings.
At the ‘Fitch on Vietnam’ forum held in Hanoi on Friday, Sagarika Chandra, Fitch’s associate director and primary sovereign analyst for Vietnam, said Fitch Ratings last month upgraded Vietnam’s long-term foreign-currency issuer default rating to “BB” from “BB-” with a stable outlook, thanks to the country’s improved external buffers and strong macroeconomic performance, VNA reported.
Compared to other emerging countries as well as other “BB” rated peers, Vietnam currently has a high growth rate, Chandra said, adding that the country’s gross domestic product growth accelerated to 6.8% in 2017 and looks set to grow by another 6.7% this year.
This is one of the important factors in upgrading Vietnam’s credit rating, she added.
Besides, the country’s macroeconomic stability, a cushion against external shocks and satisfaction in certain financial criteria were also key drivers for Fitch’s upgrading to Vietnam, she said, adding that the Vietnamese government adopted a flexible exchange-rate mechanism in January 2016 besides pledging to limit the national debts and restructuring State-owned enterprises.
According to Fitch’s forecast, Vietnam will “remain among the fastest-growing economies in the Asia-Pacific region, and fastest among ‘BB’ rated peers.
At the forum, many experts also pointed out that Vietnam’s economy has several internal and external strengths, ranging from capital inflows, labor and productivity in the agricultural, processing and manufacturing sectors, which creates a sustainable structure.
Can Van Luc, chief economist of the Bank for Development Investment of Vietnam, said that the Vietnamese economy has many positive outlooks with the recognition of international organizations such as the World Bank that has recently also raised its outlook for Vietnam’s economic growth to 6.8% from the previous forecast of 6.5%.