Easing inflation and improvements in the trade balance suggest that Vietnam 's economy is stabilising, but authorities need to double their commitment to the "Resolution 11" policies to maintain this progress, Fitch Ratings has said.
Resolution 11 is a package of measures adopted a year ago to help cool the overheating economy, which cut credit growth and encouraged broad money growth.
The global rating agency said the drop in inflation and strength of external finances indicates that Resolution 11 is gradually paying off. A cooling economy and improved trade position are helping stabilise the exchange rate, and a more stable Vietnamese dong can provide additional help in containing inflation.
There is a strong possibility that the smaller trade deficit means the country's FX reserves remain fairly healthy, lessening the risk of a balance-of-payments crisis. This probable result would also build on the increase in official reserves to 15.2 billion USD at the end of September, from 12 billion USD at the beginning of the year.
"We rate Vietnam ‘B+' with a Stable Outlook. Due to the risks from inflation, which remain very high relative to GDP growth, and the challenges of cooling an economy that has been overheated since 2008, we will continue to monitor the implementation and results of the Resolution 11 policies closely in our assessment of Vietnam," Fitch Ratings said on its website.
Vietnam 's trade deficit for January and February totalled 628 million USD, the General Statistics Office said, down from nearly 1.99 billion USD in the same period last year.
The consumer price index (CPI) rose 16.4 percent year-on-year in February, down from 17.3 percent in January./.
Resolution 11 is a package of measures adopted a year ago to help cool the overheating economy, which cut credit growth and encouraged broad money growth.
The global rating agency said the drop in inflation and strength of external finances indicates that Resolution 11 is gradually paying off. A cooling economy and improved trade position are helping stabilise the exchange rate, and a more stable Vietnamese dong can provide additional help in containing inflation.
There is a strong possibility that the smaller trade deficit means the country's FX reserves remain fairly healthy, lessening the risk of a balance-of-payments crisis. This probable result would also build on the increase in official reserves to 15.2 billion USD at the end of September, from 12 billion USD at the beginning of the year.
"We rate Vietnam ‘B+' with a Stable Outlook. Due to the risks from inflation, which remain very high relative to GDP growth, and the challenges of cooling an economy that has been overheated since 2008, we will continue to monitor the implementation and results of the Resolution 11 policies closely in our assessment of Vietnam," Fitch Ratings said on its website.
Vietnam 's trade deficit for January and February totalled 628 million USD, the General Statistics Office said, down from nearly 1.99 billion USD in the same period last year.
The consumer price index (CPI) rose 16.4 percent year-on-year in February, down from 17.3 percent in January./.
