Spending in consumer categories outside of F&B will see a double-digit rise.
Vietnam’s retailers and restaurants can expect to enjoy a recovery in the country’s consumer spending for 2021, which is projected to climb 7.0% YoY over the year, according to a report from Fitch Solutions.
This marks the strengthening on the 0.8% YoY growth in household spending estimated over 2020. It also indicates a return to the country’s previous consumer spending growth trajectory, which averaged an annual increase of 6.6% over the 2015-2019 period.
All of the main consumer spending categories are expected to post double digits YoY nominal rise in 2021. Food and non-alcoholic drink (F&B) spending were prioritised in household budgets over 2020, and so growth in spending on these items will be slower YoY at 6.6%.
Spending in other categories is estimated to have lowered growth in 2020, as households cut purchases on non-essential items and retail and business operations in these categories were curtailed due to lockdowns, offering a lower base for these categories in 2021.
The government has largely contained the spread of the coronavirus in the country and has been quick to react to new outbreaks. At the same time, foreigners from countries/territories that have reported the new variant are required to be quarantined for more than 14 days.
“We do note that existing restrictions do make bricks and mortar shopping less attractive, with consumers limiting the number of times they go shopping, or avoiding crowded areas, such as shopping malls and restaurants, but we believe that in comparison to historic restrictions and those faced by consumers in other nations the impact on spending will be minimal, Fitch said.
In 2020, the Vietnam government implemented support measures in response to the pandemic, including a $1.5b (VND36t) cash handout package to about 20% of the population. These include low income families, unemployed workers, and owners of suspended businesses.
The SBV also asked credit institutions in October 2020 to accelerate consumer loans to meet legitimate demand of individuals and households. Fitch believes that this will help aid consumer spending.
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