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Vietnam outperforms among Asia’s frontier sovereigns Vietnam is positioned to stand out among Asia’s frontier and emerging markets this year in terms of its economic resilience and success in bringing the coronavirus outbreak under control, says Fitch Ratings.
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hese factors should support Vietnam’s ‘BB’ rating, which Fitch affirmed in April 2020 while revising the Outlook to Stable from Positive. Nevertheless, the country faces a number of challenges, including contingent liability risks from stateowned enterprises and structural weaknesses in the banking sector. “Vietnam is one of only four Fitchrated sovereigns in the Asia Pacific (APAC) that we expect to post positive economic growth in 2020. Official data show the economy expanded by 0.4 percent year-on-year in the second quarter of 2020, despite the impact of the coronavirus pandemic on tourism and export demand, in line with our full-year 2.8 percent growth projection”, Fitch commented.
Foreign Direct Investment in Vietnam (Realised capital)
Fitch forecasts that the pace of expansion will accelerate in 2021, as external demand, including tourism exports, recovers. The relative strength of Vietnam’s growth momentum owes much to its success in curbing the pandemic. Vietnam had no reported deaths from Covid-19 as of end-June, according to the World Health Organisation. This could reflect a variety of factors, including the effectiveness of the official health policy response.
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Vietnam has introduced fiscal stimulus of around VND271 trillion (3.4 percent of GDP) to help offset the effects of the pandemic. This includes tax deferrals, cuts and exemptions, as well as cash transfers to affected workers and households, the latter being worth
