Moody’s: Vietnam’s real GDP growth to reach 6.7 percent in 2018
Moody's predicts Vietnam’s real GDP growth to reach 6.7 percent in 2018 (Source: VNA)
Moody’s Investors Service said that Vietnam’s real GDP
growth will remain robust, averaging 6.7 percent in 2018, in its annual credit
analysis released on April 3.
According to Moody’s, the country’s (B1 positive) credit
profile reflects the economy’s robust growth trends, which are spurred in turn
by its increasing competitiveness and a rapid economic transition away from
traditional sectors such as agriculture into manufacturing, and further up the
value-added scale within these sectors.
Moody's credit analysis, titled "Government of Vietnam
-- B1 positive", rated Vietnam’s economic strength as "high (-)",
institutional strength "low
(+)"; fiscal strength "moderate (-)"; and susceptibility to
event risk "high (-)".
It said Vietnam’s 2018 growth, nearly twice as high as the
average for B-rated sovereigns of 3.6 percent, is supported by domestic
consumption and by strong investment growth on the back of public sector
infrastructure development spending.
Moody's also expects that strong foreign direct investment
(FDI) inflows will continue to diversify Vietnam's economy and strengthen
growth compared with similarly rated peers, thereby supporting a stabilization
in the government's debt burden.
It points out that while rapid credit growth presents risks
to the banking system, it could also represent a degree of financial deepening.
High government debt levels and widening deficits act as a
credit constraint, and as Vietnam graduates from the World Bank's International
Development Association program, its debt affordability may erode.
To increase credit ratings, Moody’s suggests Vietnam carry
out concrete measures to reduce the Government’s debt burden, and strengthen
the banking system and State-owned enterprises in order to diminish contingent
risks to the government and lower macro-financial risks.
Moody's Investors Service is a leading provider of credit
ratings, research, and risk analysis.The firm's ratings and analysis track debt
covering more than 135 sovereign nations, approximately 5,000 non-financial
corporate issuers, 4,000 financial institutions issuers, 18,000 public finance
issuers, 11,000 structured finance transactions, and 1,000 infrastructure and
project finance issuers.-VNA