According to the Ministry of Finance, Fitch Ratings upgraded Vietnam's national credit rating on the basis of recognizing favorable growth prospects in the medium term, reinforced by strong foreign investment capital flows.

Fitch assesses that challenges from difficulties in the real estate market and weakening global demand will have little impact on the macroeconomic outlook in the medium term. Abundant policies will help control risks in the short term.

Fitch Ratings upgraded Vietnam's national credit rating on the basis of recognizing favorable growth prospects in the medium term, reinforced by strong foreign investment capital flows. Photo: Hanoimoi

Economic growth will continue to underpin healthy public finances, with government debt expected to continue to remain lower than other countries.

Vietnam and the U.S. upgraded their diplomatic relations to a comprehensive strategic partnership in September, which could facilitate greater FDI from the U.S. to Vietnam as well as further promote two-way trade.

Another positive sign is that Vietnam’s foreign exchange reserves, after a sharp decrease last year, have improved gradually, reaching US$89 billion by the end of September 2023, partly reflecting some return of capital flows and a larger trade surplus.

Fitch forecasts Vietnam's economic growth to be about 7%, thanks to growth momentum from strong FDI capital flows and abundant labor resources.

They also forecast Vietnam will gain a medium-term growth of around seven percent, thanks to its cost competitiveness, educated workforce relative to peers, and entry into regional and global free-trade agreements that all help maintain continued strong FDI inflows amid global supply chain diversification.

One of the factors that the Fitch Organization highly appreciates in Vietnam's credit profile is that Government debt is much lower than in other countries with the same BB rating.

The Government's favorable foreign debt structure and low debt repayment obligations have contributed to reducing the foreign debt burden and strengthening the liquidity index.

Fitch forecasts Vietnam's economic growth to be about 7%, thanks to growth momentum from strong FDI capital flows and abundant labor resources. Photo: Fitch Ratings

In the medium term, budget revenue will be strengthened thanks to solutions to expand the tax collection base set out in Vietnam's Financial Strategy to 2030.

Fitch believes that with the Vietnamese Government continuing to implement policies to support growth and macroeconomic stability, the economy will regain growth momentum in the near future.

According to the finance ministry, Fitch’s upgrade of Vietnam’s national credit rating came as the world has faced challenges of declined economic and trade growth, and many countries have been struggling with financial risks.

The advancement has therefore reflected the international recognition of the great efforts of the Party, the National Assembly, and the government of Vietnam over the past time to consolidate the nation’s socio-political background, stabilize its macroeconomics, and accelerate its economic recovery and development, the ministry stated.

The agency said it will continue to coordinate with Fitch and other credit rating organizations and relevant international organizations to provide them with the latest information necessary for a complete and updated assessment of Vietnam’s credit profile.

Fitch Ratings Inc. is an American credit rating agency and is one of the "Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations designated by the U.S. Securities and Exchange Commission in 1975.

Fitch Ratings is dual headquartered in New York and London. Hearst owns 100 percent of the company following its acquisition of an additional 20 percent for $2.8 billion on April 12, 2018. Hearst had owned 80 percent of the company after increasing its ownership stake by 30 percent on December 12, 2014, in a transaction valued at $1.965 billion. Hearst's previous equity interest was 50 percent following expansions on an original acquisition in 2006.

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