JavaScript is off. Please enable to view full site.

S&P raises Vietnam’s credit rating to ‘BB+’ from ‘BB,’ maintains stable outlook

S&P raises Vietnam’s credit rating to ‘BB+’ from ‘BB,’ maintains stable outlook

Friday, May 27, 2022, 15:29 GMT+7
S&P raises Vietnam’s credit rating to ‘BB+’ from ‘BB,’ maintains stable outlook
A medical worker administers a dose of COVID-19 vaccine to a woman in Vietnam. Photo: Duyen Phan / Tuoi Tre

American credit rating agency S&P Global Ratings on Thursday raised its long-term sovereign credit rating on Vietnam to 'BB+' from ‘BB,’ but maintained its outlook at ‘stable,’ according to the Ministry of Finance.

S&P’s sovereign ratings reflect its analysis of institutional and governance effectiveness, economic structure and growth prospects, external finances, and fiscal and monetary flexibility of a sovereign.

A sovereign is a state that administers its own government and is not subject to or dependent on another sovereign for all or most prerogatives, according to S&P's definition.

The upgrade to 'BB+' from ‘BB’ is a reflection of the Vietnamese economy’s strong recovery prospects following the progressive lift of domestic and cross-border mobility restrictions, outstanding improvement in vaccination rates, and a flexible shift in COVID containment policy.

The significant improvements in government administrative processes, in particular the governance quality of government-guaranteed debt obligations, robust economic growth prospects, strong external position and resilient foreign direct investment  (FDI) flows despite pandemic disruptions were also factored in S&P’s decision to upgrade Vietnam’s ratings.

The stable outlook reflects S&P’s expectations that over the next 12-24 months, Vietnam’s economy will continue to recover from the challenges posed by the pandemic in the past two years, which will support the external position and contain fiscal deficits.

In the American credit rating agency's view, Vietnam’s gross domestic product (GDP) per capita has risen quickly in the past few years and is expected to reach a 10-year weighted average growth rate of real GDP per capita of approximately 4.8 percent, significantly higher than the average of Vietnam’s peers at a similar income level.

S&P forecasts real GDP will grow 6.9 percent in 2022 and maintain a long-term trend of growing 6.5-7 percent from 2023 onward.

Vietnam’s macroeconomic stability combined with advantages in competitive labor, improved education standards, and favorable demographics have been key growth drivers in strengthening the country's attractiveness as a destination for global enterprises in the manufacturing sector, creating momentum for export and consumption growth.

On the social front, S&P acknowledges that the Vietnamese government has generally delivered strong development outcomes in the past decade, strengthening a strong social compact between the government and citizens.

On the fiscal front, the credit rating company also recognizes that Vietnam’s public finances have been stable despite pressures from the pandemic.

This agency expects the fiscal deficit to be temporarily widened due to the implementation of the social-economic recovery program.

However, S&P states that the policy space is ample in the context of a sharp reduction in public debt.

Against the backdrop of challenging global developments and deep scarring effects of the coronavirus crisis leading to over 30 downgrades by credit rating agencies in the year to date, Vietnam is one of the only two representatives in the Asia-Pacific region to have been upgraded this year, with the other being Taiwan.

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

Tuoi Tre News

More

Read more

;

Photos

VIDEOS

‘Taste of Australia’ gala dinner held in Ho Chi Minh City after 2-year hiatus

Taste of Australia Gala Reception has returned to the Park Hyatt Hotel in Ho Chi Minh City's District 1 after a two-year hiatus due to the COVID-19 pandemic

Vietnamese woman gives unconditional love to hundreds of adopted children

Despite her own immense hardship, she has taken in and cared for hundreds of orphans over the past three decades.

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

Latest news