What is the Vietnam bond rating?

Vietnam’s Bond Rating Affirmed by Fitch, Outlook Remains Stable

Fitch Ratings has affirmed Vietnam’s long-term foreign-currency issuer default rating (IDR) at ‘BB+’. The outlook for the rating remains stable, as stated in the agency’s announcement on June 28th.

Rating Rationale

The ‘BB+’ rating reflects Vietnam’s robust economic growth, improving macroeconomic stability, and prudent fiscal management. Fitch highlights the country’s continued strong export performance and the effective containment of inflation.

Stable Outlook

The stable outlook indicates that Fitch expects Vietnam to maintain its strong economic fundamentals and continue implementing prudent policies. The agency noted that Vietnam’s GDP growth is projected to remain elevated in the medium term, driven by domestic demand and export competitiveness.

Key Factors

• Economic Growth: Vietnam’s GDP grew by 7.5% in the first half of 2023, supported by a strong manufacturing sector. Fitch forecasts GDP growth to average 6.7% over the next three years.
• Macroeconomic Stability: Inflation has been kept within the State Bank of Vietnam’s target range, and the external sector remains resilient with a stable current account surplus.
• Fiscal Discipline: Vietnam’s fiscal deficit is projected to remain at a moderate level in the medium term, supported by revenue growth and prudent expenditure management.
• External Debt: Vietnam’s external debt remains relatively low, and the government has taken steps to manage its currency risk.

Challenges

Fitch acknowledges that Vietnam faces some challenges, including:

• Rising Inflation: Inflation pressures could intensify due to global supply chain disruptions and the war in Ukraine.
• Fiscal Risks: The government’s ambitious infrastructure spending plans could put pressure on fiscal sustainability.
• External Shocks: Vietnam’s export-oriented economy is vulnerable to external shocks, such as a slowdown in global demand.

Conclusion

Fitch’s affirmation of Vietnam’s ‘BB+’ rating with a stable outlook reflects the country’s strong economic performance, prudent policies, and stable macroeconomic environment. The rating agency expects Vietnam to continue to implement policies that support economic growth while managing potential risks.