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Last updated: Thursday, April 18, 2019


Moody’s: Vietnam’s Real GDP Growth to Reach 6.7% in 2018

Posted: Wednesday, April 04, 2018

Moody’s Investors Service said that Vietnam’s real GDP growth will remain robust, averaging 6.7 per cent in 2018, in its annual credit analysis released on April 3.

According to Moody’s, the country’s (B1 positive) credit profile reflects the economy’s robust growth trends, which are spurred in turn by its increasing competitiveness and a rapid economic transition away from traditional sectors such as agriculture into manufacturing, and further up the value-added scale within these sectors.

Moody's credit analysis, titled "Government of Vietnam -- B1 positive", rated Vietnam’s economic strength as "high (-)", institutional strength "low (+)"; fiscal strength "moderate (-)"; and susceptibility to event risk "high (-)".

It said Vietnam’s 2018 growth, nearly twice as high as the average for B-rated sovereigns of 3.6 per cent, is supported by domestic consumption and by strong investment growth on the back of public sector infrastructure development spending.

Moody's also expects that strong foreign direct investment inflows will continue to diversify Vietnam's economy and strengthen growth compared with similarly rated peers, thereby supporting a stabilisation in the government's debt burden.

It points out that while rapid credit growth presents risks to the banking system, it could also represent a degree of financial deepening.

High government debt levels and widening deficits act as a credit constraint, and as Vietnam graduates from the World Bank's International Development Association program, its debt affordability may erode.

To increase credit ratings, Moody’s suggests Vietnam carry out concrete measures to reduce the Government’s debt burden, and strengthen the banking system and State-owned enterprises in order to diminish contingent risks to the government and lower macro-financial risks.


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