HSBC forecasts revival in consumer demand

By Vien Thong   February 11, 2024 | 05:49 am PT
HSBC forecasts revival in consumer demand
Shoppers at a supermarket in Hanoi on March 2, 2024. Photo by VnExpress/Ngoc Thanh
After a bleak 2023, consumer demand is expected to pick up this year, according to lender HSBC.

In a recent report it said the consumer sector, which is equivalent in size to more than 50% of Vietnam’s GDP, was under a lot of pressure in 2023, with personal consumption growing at a mere 3%, or half the pre-pandemic rate (7.5%).

The key reasons were that foreign trade slowed down, affecting employment, the real estate market weakened, and people tended to be wary and increase savings.

But the economy is starting well in 2024 and the consumer sector has the potential to revive, and some stocks in the consumer sector are already recovering. In the short term there are two basic reasons for the forecast.

The first is that the global trade cycle will support the labor market. Electronic exports have recently shown positive signs, suggesting the darkest period is over.

The country hopes to receive 17-18 million foreign visitors this year, matching the record number in 2019, and earn tourism revenues of VND840 trillion (US$33.6 billion), or 8% of GDP, surpassing the encouraging results of last year.

In the long term, Vietnamese people are still increasing asset accumulation, promoting stronger consumption and shifting to non-essential goods and services like transportation.

The current motorbike ownership rate is 70%, and the number of car purchases is increasing, with a trend of preferring more expensive SUVs to sedans.

Average incomes have increased faster than spending in recent years, helping support increased consumption.

The emerging middle class has captured the attention of international businesses looking for profitable opportunities.

Japanese FDI is pouring into the retail and financial services sectors.

According to a recent survey by the Japan External Trade Organization, 100% of Japanese retailers in Vietnam plan to expand their operations.

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