S&P Affirms Vietnam’s Sovereign Rating at BB with Stable Outlook

1:25:08 PM | 5/29/2020

S&P Global Ratings announced it maintained Vietnam’s sovereign credit rating at BB, with a stable outlook on May 21, 2020.

The affirmation by S&P showed that the agency forecast that Vietnam's economy will continue to expand rapidly after a period of deceleration due to the effect of the Covid-19 pandemic in 2020. The agency recognizes that Vietnam's solid growth over the past years will continue to support its stable sovereign credit rating. S&P considered potential challenges of the fiscal and banking sectors in case the global economic recession lasts long. The stable outlook reflects S&P's expectation that Vietnam’s economy will rapidly recover and rebalance when the global pandemic is contained, with exports and aggregate domestic demand being the main growth drivers, keeping Vietnam’s ratings well above the average of its peers. In the scenario that the pandemic is largely contained by the end of 2020 or the beginning of 2021, S&P expects the real GDP growth to rebound in 2021 and from 2022 onward to settle closer to Vietnam’s long-term growth rate between 6.0%-7.0%.

During the working session between the Vietnamese Ministry of Finance and relevant agencies with S&P to assess the sovereign rating in late April, Vietnam exchanged and provided convincing evidences to demonstrate the resilience of the economy in this challenging global environment. In addition to successfully containing the Covid-19 pandemic, the country proactively carried out practical activities in assisting, collaborating and sharing experience with nations and international organizations which has been highly praised by the international community. This result shows the deepened linkage between the people and the Government and fostered a favorable foundation for the economy to recover and develop strongly after the epidemic is under control and affirms a strong external position of Vietnam.

Since early April 2020, S&P negatively adjusted the ratings and outlooks to 32 nations in which 10 nations are downgraded and 22 nations' outlooks are negatively revised. While the epidemic is well controlled in Vietnam but developing complicatedly in the world, the maintenance of rating and outlook in Vietnam is a remarkable result, manifesting S&P's trust in Vietnam’s institutional settings which consistently promote development achievements in the medium term and support broad-based improvements in income levels and quality of life.

The Ministry of Finance and relevant agencies will continue to coordinate closely with and update information on socioeconomic situation in Vietnam for S&P.

By Huong Hau, Vietnam Business Forum