Fitch Ratings upgrades Vietnam's long-term IDRs to BB+

31 Dec '23

2 min read

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Fitch Ratings has upgraded Vietnam's Long-Term Issuer Default Ratings to 'BB+', citing a positive medium-term growth outlook supported by strong foreign direct investment (FDI) inflows and a projected growth rate of around 7 per cent.
Key factors include Vietnam's cost competitiveness, educated workforce, and numerous free trade agreements.

Credit rating agency Fitch Ratings has upgraded Vietnam's Long-Term Issuer Default Ratings (IDRs) to 'BB+'. The decision reflects a robust and favourable medium-term growth outlook, buoyed by continuous strong foreign direct investment (FDI) inflows.

Fitch Ratings forecasts Vietnam’s growth in the medium term at around 7 per cent. Vietnam’s cost competitiveness, educated workforce compared with peers, and entry into numerous regional and global free trade agreements (FTAs) should bode well for continued strong FDI inflows, particularly in the context of ongoing global supply chain diversification.

“We have increasing confidence that near-term economic headwinds from property-sector stresses, weak external demand and delays in policy implementation owing to a corruption crackdown are unlikely to affect medium-term macroeconomic prospects and that policy buffers are sufficient to manage near-term risks,” the ratings agency said in its report.

Realised FDI in 2022 was $22.4 billion (about 6 per cent of GDP), up from $19.7 billion in 2021, and realised FDI until November 2023 was $20.2 billion. Diplomatic relations with the US have been upgraded to a ‘comprehensive strategic partnership’ in September, which could facilitate greater US FDI flows into, and trade with Vietnam.

Vietnam’s foreign exchange reserves as of end-September 2023 reached $89 billion, after a sharp decline in 2022.

ALCHEMPro News Desk (KD)

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