S&P revises outlook on Vietnam economy to ‘Positive’

May 24, 2021

HO CHI MINH CITY -- Vietnam's economy is likely to see a healthy recovery over coming years despite enduring headwinds stemming from the COVID-19 pandemic, according to ratings agency Standard and Poors, which has revised its outlook on Vietnam to positive from stable. S&P says its rating reflects the country's progress in strengthening important administrative processes, noting a continued gradual improvement in Vietnam's broader credit profile.

"At the same time, we affirmed our 'BB' long-term and 'B' short-term sovereign credit ratings on Vietnam," S&P said. "

Our ratings on Vietnam reflect the country's evolving institutional settings, strong growth prospects, stable fiscal position, and structural financial sector vulnerabilities."

S&P said the positive outlook captured Vietnam's improving track record of effective administrative processes following introduction of a directive in January 2020 that empowered the Ministry of Finance to make full and immediate payment of guaranteed Government debt obligations directly to the creditor.

"The outlook also reflects our expectation that Vietnam's economy will continue to expand rapidly, exemplifying continued improvements in its policymaking settings and underpinning credit metrics," S&P said.

The agency said its ratings on Vietnam reflected its modest GDP per capita, legacy banking sector weaknesses, and evolving institutional settings.

"These weaknesses are balanced against the economy's strong growth prospects and sound external position. Vietnam's solid external accounts and its ability to attract consistently strong foreign direct investment (FDI) provide further support to the ratings," S&P said.

www.standardandpoors.com (TI).