MARKET MOVEMENTS
Vietnam outlook revised to positive
Hanoi
On 21 May 2021, S&P Global Ratings revised the outlook on its long-term ratings on Vietnam to positive from stable. At the same time, the firm affirmed its 'BB' long-term and 'B' short-term sovereign credit ratings on Vietnam.
T
he Finance Ministry said Vietnam was the only country in the world to have its outlook improved by Moody’s, S&P and Fitch. According to the report, the positive outlook captures Vietnam's improving track record of effective administrative processes following the introduction of a directive in January 2020 that empowers the Ministry of Finance to make full and immediate payment of guaranteed government
debt obligations directly to the creditor. The outlook also reflects its expectation that Vietnam's economy will continue to expand rapidly, exemplifying continued improvements in its policymaking settings and underpinning credit metrics.
Vietnam's economy is well-placed to achieve a healthy recovery over the next one to two years as the pandemic becomes more contained, though nearterm risks remain elevated, especially following larger domestic outbreaks over recent weeks.
S&P revised the outlook on Vietnam to positive to reflect the continued outperformance of the economy against the challenging backdrop of Covid-19, and an improving track record in the government's administrative capacity.
S&P expects real GDP growth to rebound to 8.5 percent in 2021 before settling closer to Vietnam's longterm trend rate of growth from 2022 onward. Vietnam's attractiveness as a premier destination for FDI in Southeast Asia, along with its young, increasingly educated, and competitive workforce, should help to keep the country's long-term development trajectory intact.
In tandem with the global economy, Vietnam was materially affected by the Covid-19 pandemic, which resulted in the downturn last year. Nevertheless, the economy's real GDP expansion of 2.9 percent in 2020 was among the best globally, supported by the government's highly effective response to and containment of Covid-19 domestically.
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BIDV REVIEW
Vietnam's GDP per capita has risen quickly in the past few years from a relatively low base. A recent upward revision of the country's official nominal GDP--meant to better capture
