Pattaya Daily News

22 June 2008 :: 14:06:05 pm 29126

Report Says Vietnam Faces Strong Pressures, But No Crisis For Now

Vietnam has hit its first major hurdle on the road to a market economy. A darling of international investors in 2006-2007, sentiments have turned abruptly in recent months. Standard & Poor‘s Ratings Services examines the reasons for this turnaround as well as likely implications for the Vietnamese economy, banking sector, and sovereign credit ratings (foreign currency BB/Negative/B, local currency BB+/Negative/B) in a report titled "Credit FAQ: Vietnam Faces Strong Pressures, But No Crisis For Now."
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“Seemingly similar experiences of high inflation, rapid credit growth and burgeoning trade deficit in other emerging economies suggest the possibility of a sharp correction in economic growth,” said Standard & Poor’s credit analyst Kim Eng Tan. “However, available economic and financial indicators do not point to a Vietnamese balance-of-payment crisis developing in the near term.”

The country’s external debt burden is below the median in the ‘BB’ rating category and most of the debts have long maturities. A large part of the stock of portfolio liabilities, mainly invested in equity securities, held by non-residents entered the country in early 2007. These have since lost a significant part of their value and amount to much less than the cumulative flows of US$9 billion since 2006. The lack of capital mobility will likely keep explicit outflows at manageable levels.

The Vietnamese government has implemented a number of measures to address the overheating economy. Investor concerns could be assuaged if these measures lead to indications of slowing credit growth, easing inflation, and a declining trend in the trade deficit.

“Vietnam’s main strengths as an investment destination remain unchanged for now. Unless economic restructuring and reforms grind to a halt or are reversed, Vietnam should continue to attract investment that will boost its economic potential once it stabilizes the economy,” Mr. Tan said.

The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.

Media Contact:
David Wargin, New York (1) 212-438-1579
david_wargin@standardandpoors.com
Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
Ivan Tan, Singapore (65) 6239-6335
Lisa Coory, Hong Kong (852) 2533-3520

Reporter : PDN staff   Photo : Internet   Category : World News

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