Fitch Ratings has kept Vietnam's sovereign rating at 'BB' with a positive outlook, saying the delayed payment on a Vietnamese government-guaranteed loan in September was paid in full within the month and Fitch understands the administrative problems that gave rise to this delay are being addressed.
“Therefore, the delayed payment does not have an immediate impact on the rating,” the rating agency noted in a report released on October 31.
In the latest rating on Vietnam, Fitch said the country's economic expansion had been driven by strong foreign investment and steady export growth.
Exports as a share of Vietnamese GDP rose from 2011-18. Vietnam's current account surpluses helped build external buffers and its external liquidity ratio was well above the 'BB' category median, although funding costs would rise over time as Vietnam moves from concessional to market funding.
GDP growth remained strong in the first nine months of 2019 at 7 percent year-on-year and a similar annual growth rate in the last quarter would keep Vietnam as one of the fastest-growing economies in APAC and in the 'BB' rating category globally.
Vietnam appears to be benefiting from production shifts resulting from US-China trade tensions, although large-scale relocation of manufacturing to Vietnam will take time, and the country's high degree of trade openness means it may feel effects from the trade war, according to Fitch.
The revision of Fitch’s outlook on Vietnam to 'Positive' in May reflected improving economic management, current account surpluses, falling government debt, high growth and stable inflation.