Bank's Vietnam Consumer Confidence report finds consumer sentiment holding steady.
ANZ has released a report on Vietnam Consumer Confidence during May, with the confidence index remaining unchanged at 140.2 and well above the long-term average of 135.2.
In terms of personal finances, 36 per cent (up 1 percentage point) of Vietnamese said their families are “better” financially than this time last year compared to just 18 per cent (down 1 percentage point) who said their families are “worse” financially (the lowest for the indicator since March 2014).
Fifty-six per cent (down 1 percentage point) of respondents expect their families to be “better” financially this time next year, against only 5 per cent (down 1 percentage point) expecting to be “worse”. Fifty-three per cent (down 2 percentage points) expect Vietnam to have “good times” financially speaking over the next 12 months and 12 per cent (up 1 percentage point) expect “bad times” for the country financially.
In the longer-term, 61 per cent (down 2 percentage points) expect Vietnam to have “good times” economically over the next five years compared to just 5 per cent (unchanged) who expect “bad times”. Forty-seven per cent (unchanged) of respondents believe now is a “good time to buy” major household items compared to 12 per cent (down 3 percentage points) who believe it is a “bad time to buy” such items.
“Vietnamese consumer confidence is holding steady as the economic recovery gains a surer footing,” Mr. Glenn Maguire, ANZ Chief Economist, South Asia, ASEAN & Pacific, wrote in the report. “Our broad macro assessment is that the Vietnamese economy has now bottomed out and we foresee an ongoing recovery for 2015 and 2016. The transmission mechanism of a firming economic recovery to consumer confidence should be relatively straightforward. Industrial production and manufacturing production manager indexes (PMIs) are soaring in Vietnam and firmer output will soon translate into higher income and employment. As this dynamic unfolds, we would expect to see both confidence and aggregate income formation improving over coming quarters."
The ongoing firming recovery should create an environment where households become more confident to spend, further strengthening the recovery in domestic demand. The obvious caveat is that for an emerging economy this transmission mechanism may play out with uncertain lags or be only partially transmitted given high savings rates.
Still, the Vietnamese economy appears to be entering a sweeter spot and both consumer confidence and spending will play a key role in ensuring that is where the economy is likely to stay in the medium term. Vietnam is increasingly emerging as Southeast Asia’s most attractive economy.