A drop and a record high in consumer confidence

The ANZ-Roy Morgan Vietnam Consumer Confidence is down 4.5 points to 138.6 points in July. However, Vietnamese consumer confidence remains above its 2014 average of 133.3 and is now 4.5points higher than in last July.

The fall in July gives testimony to the reduced confidence about the Vietnamese economy in the next 12 months and the next five years, as fewer respondents believe ‘now is a good time’ to buy major household items, the bank reported.

“Dichotomies in the Vietnamese economy appear to be changing. The earlier stages of recovery were characterised by an outperforming external sector and underperforming domestic and household sectors. Our consumer confidence indexhas clearly shown that this dichotomy is starting to yield to a more even and balanced economic performance,” said Gleen Maguire, ANZ chief economist in South Asia, ASEAN & Pacific.

In terms of personal finances, the number of respondents commenting that their families are now better off than last year fell from 36 to 34 per cent. However, respondents expecting their families’ financial situation to improve by this time next year rose to 63 per cent, showing the most optimism the survey has ever seen.

“The assessment of personal financial situations generally bucks the trend of declining optimism on both the short and long term economic outlook,” said Glenn.

An important consideration here would probably be the widespread coverage of corporate
minimum wage increases proposed for 2016. The Vietnam General Confederation of
Labour (VGLC) has proposed a 16-17 per cent increase in wages for next year, to which respondents have shown positive response.

Glenn believes if endorsed by the National Salary Council, the firm increase in the minimum wage will go a long way towards bolstering domestic demand and private consumption in what could be a more uncertain global backdrop.

“We continue to remain optimistic on the strength and durability of the Vietnamese economic recovery, particularly the consumer components, as we look into 2016,” he said.

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