Restrictions to control the spread of the disease will weigh on activity in the third quarter and could persist if the outbreak is not put under control, it said in a note released Monday.

"This poses significant risks to our current forecast that growth will average 6 percent in 2021," the note stated.

However, Fitch still expects Vietnam’s GDP performance over 2020-2021 to be the strongest among Fitch-rated sovereigns in ASEAN.

Some lost growth momentum may also be made up in subsequent quarters as output and social activity normalize, although the risk of further outbreaks will linger as Vietnam’s vaccination rates remain low.

Public finances will also be affected. Officials have indicated plans for a relief package worth roughly $5 billion (around 1.4 percent of GDP), focused on reducing taxes and fees for small and medium enterprises.

"However, we expect Vietnam’s public debt over GDP ratio to remain well below the median for ‘BB’ sovereigns in 2021-2022."

The note added goods exports have been strong, with merchandise exports rising by 26.2 percent year-on-year in the first seven months.

Factories producing for export have been disrupted by the recent outbreak, but it is expected the impact on output would be temporary.

One risk to exports appears to have been resolved in July when the U.S. announced a deal had been reached over Vietnam’s exchange-rate policies.

But Fitch still considers Vietnam to be among the most exposed to macroeconomic risks if the U.S. opted to escalate the matter.

The credit rating agency affirmed Vietnam’s rating at ‘BB’ in April and revised the outlook from "positive" to "stable" on the resilience of Vietnam’s growth and public finances to the pandemic shock.

Vietnam’s economy expanded 5.6 percent year-on-year in the first six months. The country has recorded over 354,000 Covid-19 cases since the end of April.