Moody's predicts Vietnam’s real GDP growth to reach 6.7 percent in 2018 (Source: VNA) Hanoi (VNA) – Moody’s Investors Service said that Vietnam’s real GDPgrowth will remain robust, averaging 6.7 percent in 2018, in its annual creditanalysis released on April 3.
According to Moody’s, the country’s (B1 positive) creditprofile reflects the economy’s robust growth trends, which are spurred in turnby its increasing competitiveness and a rapid economic transition away fromtraditional sectors such as agriculture into manufacturing, and further up thevalue-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 toevent risk "high (-)".
It said Vietnam’s 2018 growth, nearly twice as high as theaverage for B-rated sovereigns of 3.6 percent, is supported by domesticconsumption and by strong investment growth on the back of public sectorinfrastructure development spending.
Moody's also expects that strong foreign direct investment(FDI) inflows will continue to diversify Vietnam's economy and strengthengrowth compared with similarly rated peers, thereby supporting a stabilizationin the government's debt burden.
It points out that while rapid credit growth presents risksto the banking system, it could also represent a degree of financial deepening.
High government debt levels and widening deficits act as acredit constraint, and as Vietnam graduates from the World Bank's InternationalDevelopment Association program, its debt affordability may erode.
To increase credit ratings, Moody’s suggests Vietnam carryout concrete measures to reduce the Government’s debt burden, and strengthenthe banking system and State-owned enterprises in order to diminish contingentrisks to the government and lower macro-financial risks.
Moody's Investors Service is a leading provider of creditratings, research, and risk analysis.The firm's ratings and analysis track debtcovering more than 135 sovereign nations, approximately 5,000 non-financialcorporate issuers, 4,000 financial institutions issuers, 18,000 public financeissuers, 11,000 structured finance transactions, and 1,000 infrastructure andproject finance issuers.-VNA
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