S&P's affirmation of Vietnam's national credit rating at BB indicates the agency’s assessment of the strong recovery potential of Vietnam's economy in 2020 after a period of deceleration due to the impact of the COVID0-19 pandemic. This credit rating agency believes that Vietnam's solid growth achievements over the years will continue to support its national credit rating. S&P has considered the potential challenges of the finance and banking sectors in case the global economic recession continues to last.
Vietnam's credit outlook is maintained Stable, showing that the economy will recover quickly when the global pandemic is under control. Increasing exports and domestic demand are the main drivers of growth, making Vietnam's growth forecast much higher than the average of countries which have the same credit ratings. If the global pandemic is controlled by the end of 2020 or early 2021, S&P forecasts real GDP growth of Vietnam will recover in 2021, and accelerate from 2022.
During the course of the Ministry of Finance and relevant agencies working with S&P to evaluate the national credit rating at the end of April 2020, Vietnam exchanged and presented convincing evidence of the adaptive capacity of the economy which is clearly shown in the current challenging global context.
In addition to the success in effectively preventing the spread of the COVID-19 pandemic in the country, Vietnam has actively implemented many practical activities to support, cooperate, and share the experience in epidemic prevention and control with other countries and international organizations, and is highly appreciated by the international community. This result contributes to fostering a favorable foundation for the economy to recover and develop strongly after the epidemic is under control and affirms Vietnam's steadfast position.
Since the beginning of April, S&P has downgraded credit ratings and outlook for 32 countries around the world. In the context of a well-controlled epidemic in Vietnam yet complicated developments on a global scale, S&P's confirmation of maintaining Vietnam's national credit rating and outlook is a remarkable result.
Previously, in early April, Fitch Ratings also announced that it would keep Vietnam's national credit rating at BB and adjust the outlook from "Positive" to "Stable". Fitch also appreciated that Vietnam has taken advantage of favorable economic conditions in recent years to consolidate the fiscal situation and accumulate foreign exchange reserves, contributing to increasing the buffer level against macro risks. Fitch predicts Vietnam's economic growth momentum will return in 2021 with an expected growth rate of 7.3%.
The Ministry of Finance and its relevant agencies will continue to coordinate closely and update S&P and Fitch Ratings with information on the socio-economic situation in Vietnam.
Source: Fitch Ratings, S&P