Moody’s Investors Service has predicted that Vietnam’s gross domestic product growth will remain robust, averaging 6.7% in 2018, VNA reported. This is nearly twice as high as the average for B-rated sovereigns of 3.6%, according to Moody’s credit analysis, titled “Government of Vietnam—B1 positive”, released on Tuesday. In its report, the rating agency said the growth was supported by domestic consumption and strong investment growth on the back of development spending on public sector infrastructure. Moody’s said the government’s credit profile reflected the economy’s robust growth trends. These trends are spurred in turn by the country’s increasing competitiveness and a rapid economic transition from traditional sectors, such as agriculture, to manufacturing and further up the value-added scale within these sectors. The agency expects that strong foreign direct investment inflows will continue to diversify Vietnam’s economy and strengthen growth compared to similarly rated peers, thereby supporting stabilization in the government’s debt burden. Rapid domestic credit growth has in part financed strong domestic demand and continues to significantly outpace nominal GDP growth. Moody’s points out that while rapid credit growth presents risks to the banking system, it can also represent a degree of financial deepening.
