The US-based credit rating said Vietnam’s cost competitiveness, educated workforce compared with peers, and entry into numerous regional and global free trade agreements (FTAs) should bode well for continued strong Foreign Direct Investment (FDI), particularly in the context of ongoing global supply chain diversification.

Diplomatic relations with the US were upgraded to a “comprehensive strategic partnership” in September, which could facilitate greater US FDI and increased trade with Vietnam, it said.

“The upgrade of Vietnam’s long-term Issuer Default Ratings to ‘BB+’ reflects its favorable medium-term growth outlook, which is underpinned by robust FDI, that we expect will continue to drive sustained improvements in its structural credit metrics,” Fitch Ratings noted.

The agency said it has increasing confidence that near-term economic headwinds from property-sector stress, weak external demand, and other factors are unlikely to affect the country’s medium-term macroeconomic prospects and that policy buffers are sufficient to manage near-term risk.