Fitch Solutions has revised down its GDP growth forecast to Vietnam to 2.6% from the previous 3.0% given a slower pace of recovery than previously anticipated.

Vietnam’s real GDP grew by 2.6% year-on-year in the third quarter (Q3) this year, significantly higher than a 0.4% expansion in Q2, with the recovery mainly attributed to a rebound in services growth.

“Our forecast continues to reflect our view for Vietnam’s economic recovery to gain steam in the final quarter and into 2021, supported by manufacturing, construction, and services.

Fitch Solutions said it maintains forecast for an 8.2% rebound in 2021, assuming freer international movement of persons, which would support a tourism rebound and better containment success externally for most of the year, especially in major export destinations for Vietnam such as the US and Europe, which would support external demand.

“Vietnam’s dependence on trade for growth means that persistent weakness in external demand as major western economies continue to struggle with their Covid-19 outbreaks will drag on the pace of recovery in Vietnam’s manufacturing sector,” the agency said in a note released on Wednesday.

Meanwhile, barring another episode of localized tightening of restrictions in Vietnam due to another domestic outbreak, services growth is likely to strengthen somewhat over the final quarter, supported by domestic demand.