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|The Vietnam Consumer Confidence shed more than 50 points due to the COVID-19 outbreak|
Prior to the COVID-19 outbreak in China, 70 per cent of the more than 7,000 local consumers surveyed by Infocus Mekong Research thought the Vietnamese economy would do better in 2020 than in 2019.
Four weeks later, in a survey of the same consumers, less than 20 per cent were upbeat about Vietnam's economic prospects, with 62 per cent stating the economy would be worse in 2020 than in 2019. The survey was released on February 20 at the CanCham Crystal Ball Luncheon.
The turnaround in sentiment has been unprecedented. Even the SARS outbreak in 2003 could best be described as only a blip on Vietnam’s Consumer Confidence radar.
Prior to the outbreak, Vietnamese consumers' biggest fears and reservations concerning 2020 were environmental pollution, the reduction of healthcare/education services and Infrastructure development in the country. Now consumer fears are completely focused on being Infected by the coronavirus and its negative business impact.
Education, food and beverages, healthcare, and personal care remain the top spending categories for 2020. However, the growth of these categories seems to be in decline, especially for all forms of communications, with the advent of Viber, WhatsApp, or Zalo Chat, digging into communications revenues. As 90 per cent of the Vietnamese population above 18 already own smartphones, even Thegioididong a.k.a. Mobile World is resorting to selling watches to stem the bleeding.
Almost all entertainment activities will suffer significantly in 2020, from travel/tourism, hospitality, and restaurants to bars and cinemas, as Vietnamese consumers avoid public places. However, due to the corona health scare, healthcare and personal care products could rebound as consumers go out of their way to protect their families from infection.
There is also a decline in personal loans. In 2019, 54 per cent of those surveyed took out some form of loan from either a bank, consumer credit institution, or from other non-institutional sources, only a growth of 2 per cent against 2018. Considering the cautious sentiment in the Year of the Rat, this may well decline in 2020.
Historically, Vietnamese are very optimistic people, consistently ranking among the top 10 percentile in Asia, and are resolute and resourceful. However, with public schools potentially being shut down till March, creating a huge impact on productivity and parental burdens, and due to the daily coronavirus warnings from the Ministry of Health, fear has struck at the hearts of Vietnamese consumers.
Hence, consumerism growth will be down versus 2019 by an estimated 10-15 per cent, predicated by the Year of the Rat conservatism and the coronavirus' negative impacts on consumer purchasing behaviour. Some sectors will be impacted much worse than others, and the end result will not be positive for overall consumption growth in 2020.