The outlook for the long-term rating is stable, reflecting the expectation that Vietnam’s economy will accelerate over the next 12 months as global demand improves and Vietnam gradually resolves domestic challenges. The agency stated that the sovereign credit rating reflects Vietnam’s strong economic growth prospects, moderate government debt levels and generally stable external position.
S&P Global Ratings forecasts Vietnam’s economic growth to reach 5.8% in 2024, after slowing to 5% in 2023. Vietnam remains an attractive destination for foreign investment, especially in the manufacturing sector, as companies continue to diversify their operations across the region. The semiconductor industry’s growth cycle is likely to drive Vietnam’s growth in 2024 as exports from the sector increase.
In the service sector, cross-border tourism is recovering, with a surge in Chinese tourists. According to the National Tourism Administration, the total number of tourists to Vietnam in the first five months of 2024 increased by 165% compared to the same period in 2023. Domestic demand is also recovering, although it is still slower than GDP growth. Public investment is likely to accelerate gradually in the coming years, mainly from the state budget.
Over the next three to four years, S&P Global Ratings expects Vietnam's real GDP growth to return to its long-term trend of 6.5-7%. According to the organization, although Vietnam's economic recovery still has some potential risks, Vietnam's economic outlook remains positive. The economy is increasingly diversified, with the manufacturing sector booming, mainly thanks to foreign direct investment (FDI). Vietnam is an attractive FDI destination in Southeast Asia thanks to its young, increasingly educated and competitive workforce, which will help sustain long-term growth.
S&P Global Ratings assesses that Vietnam has a stable macro-economy and an increasingly complete export logistics network, making the manufacturing sector attractive to global corporations in the electronics, mobile phone and textile industries. FDI-invested industries continue to boost domestic activities, with better job opportunities and higher wages, thereby boosting personal consumption growth.
According to S&P Global Ratings, trade performance has improved markedly since the start of 2024, following a rising current account surplus in 2023. Both exports and imports are likely to return to strong growth in 2024. The current account surplus will remain high, at around 5.5% of GDP in 2024.
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