2015 may well see rising household consumption in Vietnam given the level of consumer confidence at the beginning of the year.
According to an ANZ-Roy Morgan survey released recently, consumer confidence in Vietnam rose sharply to 142.3 points (up 6.9 points) in February, with large increases in confidence for all indicators and remaining above the 2014 average of 133.3 points.
In terms of personal finances, 38 per cent (up 5 percentage points (ppts)) of Vietnamese said their families are "better off" financially than a year ago, compared to 21 per cent (unchanged) who said their families are "worse off" financially.
Of respondents, 58 per cent (up 5 ppts) expect their families will be "better off" financially this time next year compared to just 7 per cent (up 1 ppt) who expect to be "worse off".
Over the next 12 months, 58 per cent (up 8 ppts) said Vietnam will have "good times" financially and only 13 per cent (down 1 ppt) expect "bad times".
Looking further ahead, 66 per cent (up 9 ppts) expect Vietnam will have "good times" economically over the next five years, compared to 8 per cent (up 1 ppt) who expect "bad times" economically.
In addition, 50 per cent (up 7 ppts) of Vietnamese said now is a "good time to buy" major household items, compared to 10 per cent (down 1 ppt) who believe it is a "bad time to buy" such items.
The Year of the Goat could well be an auspicious one for household consumption in Vietnam, according to Mr. Glenn Maguire, ANZ Chief Economist, South Asia, ASEAN & Pacific. "The Lunar New Year has been ushered in with Vietnamese households displaying a record level of optimism on three key components of our consumer confidence index," he said.
A record number of Vietnamese believe that they and their families are better off now than this time last year and a record number similarly believe that they and their families will be better off a year from now. "Not surprisingly, a record number of Vietnamese believe now is a good time to buy a major household item," he added.
According to Mr. Maguire, the details of the consumer confidence survey provide some optimism that the dichotomy between external and domestic demand could well start to narrow over the course of 2015. "Though we forecast the Vietnamese economy to remain on a sure and steady growth recovery over 2015-2016, the underperformance of the domestic sector may have made the extent of the recovery in external demand less apparent to ordinary households," he said.
With a more evenly distributed growth recovery aided by 50 basis point interest rate cuts and several discrete VND re-evaluations over the year, Vietnamese consumer confidence is likely to remain skewed towards the optimistic in the year ahead. "This bodes well for a gradual strengthening in household consumption," Mr. Maguire said.
- Consumer confidence