 Consumer confidence eases off record high
Saigon Times - 7/24/2015 8:43:19 AM
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The ANZ-Roy Morgan Vietnam Consumer Confidence has dropped 4.5 points to 138.6 points this month but remained above its 2014 average of 133.3 and is 4.5 points higher than in July 2014 (134.1).
According to a report released on July 22, ANZ Bank said the fall in July was mainly due to reduced confidence about the Vietnamese economy over the next 12 months and the next five years, and fewer respondents who believe ‘now is a good time’ to buy major household items.
In terms of personal finances, 34% (down two percentage points) of respondents said their families are now ‘better off’ financially than at the same time last year - the lowest recorded for this indicator since January 2015. On the other hand, 21% (down one percentage point) of respondents felt their families are ‘worse off’ financially.
In addition, 50% (down eight percentage points) of respondents expect Vietnam to have ‘good times’ financially in the next 12 months (the lowest recorded for this indicator since January 2015). Meanwhile, 13% (up three percentage points) expect ‘bad times’ financially.
In the longer term, 64% (down two percentage points) of Vietnamese expect Vietnam to have ‘good times’ economically over the next five years, while 7% (up three percentage points) expect ‘bad times’ economically.
Finally, 40% (down seven percentage points) of Vietnamese believed ‘now is a good time to buy’ major household items (the lowest recorded for the indicator since December 2014) in contrast to 12% (unchanged) who said ‘now is a bad time to buy’ major household items.
Glenn Maguire, ANZ chief economist for South Asia, ASEAN & Pacific, said that Vietnamese consumer confidence has come off its mid-year record high and continues to point to an economic recovery that is broadening and strengthening.
Dichotomies in the Vietnamese economy appear to be changing. The earlier stage of the recovery was characterized by an outperforming external sector and an underperforming domestic and household sector. The consumer confidence index has clearly shown that dichotomy is starting to yield to a more even and balanced economic performance.
Now, however, a new dichotomy appears to be emerging. A very firm 63% of households (up two percentage points) expect their families to be better off this time next year – a record high for this indicator, the expert said.
The assessment of personal financial situations generally bucks the trend of declining optimism on both the short and long term economic outlook.
An important consideration here is probably the widespread coverage of firm minimum wage increases proposed for 2016. The Vietnam General Confederation of Labor (VGLC) has proposed a 16-17% increase in wages for 2016.
If endorsed by the National Salary Council and approved by the Government, the firm increase in the regional 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,” Maguire said.
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