Fitch Ratings confirms Vietnam’s long-term rating at BB+ with stable outlook


(MENAFN) On Friday, Fitch Ratings affirmed Vietnam's long-term foreign currency issuer default rating at BB+ with a stable outlook. According to the rating agency, Vietnam's rating and outlook are underpinned by a robust medium-term growth outlook supported by sustained foreign direct investment (FDI) inflows, low government debt levels, and a favorable external debt profile.

Vietnam's strengths include its improving foreign exchange reserves, which reached USD90 billion in January, indicating a return of capital flows and a larger current account surplus. Fitch anticipates further growth in exports contributing to a substantial trade and current account surplus, which is expected to bolster reserves, averaging about three months of current external payment cover from 2024 to 2026.

However, Fitch also noted several credit weaknesses, including an underdeveloped policy framework, high economic leverage, and a lower per-capita GDP compared to its peers in the region. These factors balance against Vietnam's strengths and influence the rating.

Fitch outlined potential scenarios that could impact Vietnam's rating in the future. A downgrade could occur due to sustained declines in foreign exchange reserves or prolonged periods of higher fiscal deficits that jeopardize government debt stabilization. Conversely, an upgrade could be warranted if risks associated with liabilities diminish significantly or if Vietnam achieves high economic growth without increasing vulnerabilities.

Looking ahead, Fitch forecasts Vietnam's economy to grow between 6 percent to 7 percent in the medium-term, driven largely by robust FDI inflows. The country's educated workforce, cost competitiveness, and participation in various regional and global trade agreements are expected to sustain strong FDI inflows, especially amid ongoing global supply-chain diversification efforts.

Overall, Fitch's affirmation of Vietnam's rating underscores the country's potential for economic resilience and attractiveness to foreign investors, tempered by ongoing structural and fiscal challenges.

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