The Vietnamese Government has succeeded in decreasing public debt from 53 percent of GDP in 2016 to 50.5 percent by the end of last year, according to Fitch Ratings.

Illustrative image (Source: VNA)

Reporting at a workshop to assess Vietnam’s economic prospects amid macro challenges jointly held by Fitch Ratings and the Asset magazine in Hanoi on June 11, representatives from the US-based rating agency mentioned the factors for this organization to decide to lift  its outlook on Vietnam's 'bb' credit rating to 'positive' from 'stable'.

The Government of Vietnam continues to drastically realise its commitment to consolidate its finance sector and control public debt, they said.

This organisation forecasts that Vietnam's public debt will continue to be brought down to about 46 percent of GDP by 2020.

Fitch predicts that Vietnam will continue to receive a large amount of foreign direct investment (FDI) into the manufacturing sector, mainly in electronics segment thanks to its advantage of low cost and supply chain connectivity.

These positive trends will support stable short-term economic growth, although the global economic situation is weakening and Vietnam's high level of trade dependence can affect economic growth in 2019 and 2020, it said.

This leads Fitch to predicting that Vietnam's economic growth will decrease slightly from 7.1 percent in 2018 to 6.7 percent this year and the next.

This figure is still in the 6.6-6.8 percent growth target set by the National Assembly, and Vietnam will continue to be one of the fastest growing economies in the Asia-Pacific region, it stressed. 

Speaking at the event, Vo Huu Hien, deputy director of the Finance Ministry's Department of Debt Management and External Finance, said the prospects of Vietnam's economy in 2019 and 2020 will remain positive, with macroeconomic stability, and confidence in investment and business environment continuing to be strengthened.

However, Hien also mentioned outside challenges that Vietnam's economy is facing, saying that the US-China trade war will also have certain impact on Vietnam's economy. 

He also expressed his hope that Vietnam's credit rating in the coming time will continue to be improved, thus further lifting the national prestige, reducing the cost of raising capital, facilitating market access through strengthening the ability to attract investors.