S&P Global raises Vietnam outlook to positive

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S&P Global Ratings has revised the outlook on its long-term ratings on Vietnam to positive from stable.
sp global raises vietnam outlook to positive
Vietnam is the only to have its credit outlook upgraded by all three credit ratings agencies

Since the outbreak of the pandemic, Vietnam is the only country to be upgraded to positive by all three credit rating agencies, Moody’s, Fitch, and S&P. In April, Fitch Ratings has revised Vietnam’s outlook to positive from stable. In March, Moody’s also raised its outlook for the country to positive.

In 2020, there were 124 downgrades and 133 lower outlook revisions by the global credit rating agencies. As of May 21, around 16 countries and territories have been downgraded by the reputable agencies. 

Accordingly, S&P revised the outlook on Vietnam to positive to reflect the continued outperformance of the economy against the challenging backdrop of COVID-19, and an improving track record in the government’s administrative capacity.

In tandem with the global economy, Vietnam was materially affected by the COVID-19 pandemic, which resulted in the downturn last year. Nevertheless, the economy’s real GDP expansion of 2.9 per cent in 2020 was among the best globally, supported by the government’s highly effective response to and containment of COVID-19 domestically. Vietnam’s economy is well-placed to achieve a healthy recovery over the next one to two years as the pandemic becomes more contained, though near-term risks remain elevated, especially following larger domestic outbreaks over recent weeks.

S&P expects real GDP growth to rebound to 8.5 per cent in 2021 before settling closer to Vietnam’s long-term trend rate of growth from 2022 onward. Vietnam’s attractiveness as a premier destination for foreign investment in Southeast Asia, along with its young, increasingly educated, and competitive workforce, should help to keep the country’s long-term development trajectory intact.

Vietnam’s macroeconomic stability has supported the manufacturing sector’s attractiveness to global firms in the electronics, mobile phone, and textiles industries. The foreign-investment-oriented segment continues to fuel stronger domestic activity, with better employment opportunities and higher wages powering robust private consumption growth.

The outlook for these growth drivers is challenged in the context of the pandemic. However, Vietnam’s export sector held up well in 2020 and a deeper slowdown in private consumption has so far been averted thanks to effective public health measures. Greater household access to credit is also helping to support consumer demand.

By Thanh Van

Nguồn: Vietnam Investment Review

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