JavaScript is off. Please enable to view full site.

​Fitch raises Vietnam sovereign credit rating, sees fast growth

Tuesday, May 15, 2018, 15:01 GMT+7

Ratings firm Fitch raised Vietnam’s sovereign credit rating on Tuesday, a move that economists said should boost the Southeast Asian economy’s already-substantial investment inflows.

Fitch raised Vietnam’s long-term foreign-currency issuer default rating to ‘BB’ from ‘BB-‘, with a stable outlook.

The agency said the upgrade reflects Vietnam’s improving policy-making aimed at strengthening macroeconomic performance.

After Fitch’s move, which comes at a time there’s pressure on many emerging market economies and worries about capital outflows, there are still two more upgrades needed before the agency considers Vietnam investment grade.

In an indication that the path to an investment grade rating might not be smooth, Fitch said Vietnam’s banking sector is structurally weak and “weighs heavily on the rating”.

Fitch said it expects Vietnam’s gross domestic product to grow by the targeted 6.7 percent this year. Growth in 2017 was 6.81 percent.

Vietnam will “remain among the fastest-growing economies in the Asia-Pacific region, and fastest among ‘BB’ rated peers,” Fitch said.

It also said Vietnam’s foreign exchange reserves are expected to reach $66 billion by the end-2018, providing a cushion against external shocks.

Foreign exchange reserves rose to $49 billion at the end of 2017 from $37 billion one year earlier, backed by large capital inflows and a current account surplus, Fitch said.

Tuesday’s upgrade “is very positive as it shows macroeconomic stability is further improving,” said Can Van Luc, an economist with the Bank for Investment and Development of Vietnam.

Luc said the upgrade will lift foreign investment inflows and that Vietnam will be able to have access to lower-cost funds.

“The country needs cheaper loans from international lenders to support its growth,” he said.

Privatisation drive

The government said last month Vietnam plans to borrow 108.03 trillion dong ($4.74 billion) from foreign sources this year.

Foreign direct investment (FDI) inflows remained strong in 2017, with the manufacturing sector seeing a 40 percent increase from the previous year to $21.3 billion, Fitch said.

Vietnam’s public debt has been well contained, Fitch said, falling to 61.4 percent of GDP at the end of last year from 63.6 percent at end-2016, supported by inflows from privatisation proceeds.

In recent years, the Vietnamese government has stepped up efforts to divest state-owned enterprises, through initial public offerings and stake sales.

The government in December raised $4.48 billion from selling a controlling 53.59-percent stake in the country’s largest brewer, Saigon Beer Alcohol Beverage Corp, to Thai Beverage PCL.

This month, the State Bank of Vietnam said non-performing loans in the banking system had been reduced to below 3 percent of outstanding loans.

But Fitch said it believed non-performing loans remain under-reported and true asset quality is likely to be weaker than stated.

Like us on Facebook or follow us on Twitter to get the latest news about Vietnam!



Read more




Vietnam’s Mekong Delta celebrates spring with ‘hat boi’ performances

The art form is so popular that it attracts people from all ages in the Mekong Delta

Vietnamese youngster travels back in time with clay miniatures

Each work is a scene caught by Dung and kept in his memories through his journeys across Vietnam

Experience summer sand-boarding in Mui Ne

Sand-boarding, a popular activity amongst local children in the coastal tourism town of Mui Ne in south-central Vietnam, is attracting hundreds of tourists to the Red Sand Dunes

Young maple trees given better protection as Hanoi enters rainy season

The trees are currently growing well, with green leaves and healthy branches.

Hunting skinks for food in southern Vietnam

Skink meat is known to be soft, tasty, and highly nutritious.

Latest news

France outlaws sex with children aged under 15

The French parliament on Thursday adopted legislation that characterises sex with a child under the age of 15 as rape and punishable by up to 20 years in jail, bringing its penal code closer in line with many other Western nations