Discussing the upgrade with VTV4 this week, Denzel Eades, Managing Director of Pioneer International Consulting, noted the following key factors behind the upgrade:
* Vietnam's competitiveness is on the rise as it benefits from a reconfiguration and diversification of global supply chains and increasing FDI.
* A comprehensive network of free trade agreements, bilateral (UK, EU, Korea) and multilateral (RCEP, CPTPP) is allowing the country to tap into both lower-value and high-value-added tech supply chains.
* Prudent fiscal policy is being supported by a focus on long-term debt management (3.8% fiscal deficit forecast for 2022, debt to GDP ratio of 39.1% (2021)).
* Improved government liquidity is being facilitated by a shift from external concessional borrowing to longer-term low-cost domestic financing.
*Statutory public debt ceiling has been reduced from 65% to 60% of GDP.
*Whilst the fundamentals are strong risks are also highlighted, namely high domestic credit growth and evolving institutional capacity and frameworks for managing complex risks, such as financial stability. Domestic credit and domestic banking system assets as a percentage of GDP rose from 124% and 187% in 2021.
Video credit: VTV4- https://lnkd.in/gbWmkSNK (please click on CC for English translation)
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