The Fitch Ratings building in London, the U.K. Photo by Shutterstock/Willy Barton.
Fitch Ratings has upgraded Vietnam’s outlook to positive from stable and retained its credit rating at BB.
The upgrading of the outlook indicates the country’s ability to recover from the pandemic sine Vietnam was one of the few countries in the Asia-Pacific region to achieve positive economic growth last year.
Explaining its revision to positive, Fitch said Vietnam has been successful in bringing the coronavirus outbreak swiftly under control alongside strong policy support and export demand.
Vietnam’s GDP growth last year was export-fueled, with exports increasing by 6.5 percent, according to the General Statistic Office.
Fitch forecasts growth of 7 percent in 2021 and 2022 in line with the global economic recovery, sustained export growth and a gradual normalization of economic activity.
Vietnam’s effort to sustain high growth, reduce the GDP per capita gap with Vietnam’s BB peers while maintaining macroeconomic stability, further improvement in public finances through sustainable fiscal consolidation and debt stabilization are factors that could lead to a outlook rating upgrade in the near future.
In March another credit rating firm, Moody’s, had upgraded Vietnam’s outlook from negative to positive thanks to improvements in its fiscal strength and the global manufacturing shift to the country.
The Ministry of Finance attributed the upgrades in Vietnam’s outlook to the efforts to maintain economic stability and providing full and accurate information to credit rating agencies.
According to the U.S. credit rating agency, BB indicates an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time, but there is financial flexibility that supports the servicing of financial commitments.