ANZ-Roy Morgan research puts Vietnam's Consumer Confidence Index for December at highest point ever.
Increasing to 144.8 points, up 2.5 points over November, the Consumer Confidence Index (CCI) hit a record level in December and was the first time the index in Vietnam was the highest in Asia, according to a report from ANZ-Roy Morgan released on December 23.
Vietnam’s CCI in December was much higher than the average in the last two years of 136.6 points and significantly higher than the 135.6 points recorded in December last year. The index increased significantly, according to the report, due to greater confidence in Vietnam’s economic prospects for next five years.
Mr. Glenn Maguire, Chief Economist, Asia Pacific, at ANZ, said the remarkable growth in Vietnam’s economy comes from both foreign direct investment (FDI) and domestic investment. The five key questions when conducting the survey relating to personal financial situation and consumption demand and economic outlook in the short, medium, and long term show that confidence was stronger than in November. “Vietnam is on the verge of stepping into 2016 with high household confidence, which is a factor in determining growth given that household consumption accounts for 65 per cent of GDP,” Mr. Maguire said.
Mr. Nguyen Duc Do, Deputy Director of the Institute for Financial Economics under the Academy of Finance, said the increase in consumer confidence index reflects consumer optimism for the prospects of Vietnam’s economy in the future. But whether this confidence can be maintained will depend largely on the economic management policies of the government and ministries and income levels.
An increase in consumption will help production and incomes increase. Production, income, and consumption can interact with each other. Support is necessary from the government and ministries, such as reducing interest rates, cutting costs, and increasing investments.
Mr. Do is concerned about interest rates, believing the current levels are still high and create difficulties for businesses. In the long term higher interest rates will impact on consumption.
In its report on the macro-economic situation, the National Financial Supervisory Commission wrote that economic stability will continue to be maintained in 2016. The economy will also benefit from exports and the inflow of FDI. Administrative reforms were also identified as increasing confidence among investors, improving national competitiveness, and encouraging private investment.
However, there are many factors that may affect macro-economic stability, such as a difficult business climate, the global economy still bearing many risks, and public debt management continuing to be a challenge for economic governance.
In this context, the Commission recommended the strengthening of coordination between monetary and fiscal policy in 2016, with macro-economic policies prioritizing enterprise support and promoting investment and domestic consumption.
ANZ-Roy Morgan survey results
In terms of personal finances, survey results showed that 35 per cent (up 1 per cent compared to November) of Vietnamese consumers said the financial situation of their families is “better” than in the same period last year. Looking to 2016, 59 per cent (up 3 per cent compared to November) of consumers expect the financial situation of their families will be “better”. Meanwhile, 4 per cent (up 1 per cent) of consumers anticipate their family’s financial situation will “deteriorate”.
Forty-five per cent (up 3 per cent) of consumers said that “this is a good time” to buy major household items, while 10 per cent (up 2 per cent) said that “this is a bad time” to do so.
- Consumer Confidence Index
- ANZ-Roy Morgan
- Glenn Maguire