Vietnamese consumers most optimistic in ASEAN on economic outlook: UOB

Vietnamese consumers showed the highest level of optimism regarding their country’s economic outlook and higher appetite for investment compared with their regional peers according to a survey by Singapore-based bank UOB.

Over 70% of Vietnamese respondents expressing confidence in the country's economic performance for the next six to 12 months, with the positive sentiment after Vietnam’s GDP growth accelerated to 6.42% in the first half of 2024, UOB's ASEAN Consumer Sentiment Study (ACSS) 2024 showed.

UOB's latest economic forecast issued last month also revised Vietnam’s full-year GDP growth to 6.4%, up from 5.9%, following a remarkable Q3 expansion of 7.4%.

In addition, with borders reopening post-Covid, 71% of Vietnamese respondents said they had spent overseas within ASEAN over the past year, largely on business and leisure trips, a rate surpassing the regional average of 66% and exceeding levels seen in Indonesia, Malaysia, and Thailand.

“It is encouraging to see Vietnamese consumers leading the region in optimism around local economic conditions, with the upbeat sentiment likely contributing to the exuberance in cross-border spending. This reflects Vietnam's success in promoting stable economic growth and deepening its regional integration,” said Paul Kim, head of personal financial services, UOB Vietnam.

In its fifth year, the ACSS 2024 is UOB’s flagship regional study on consumer trends and sentiments across Singapore, Malaysia, Thailand, Indonesia, and Vietnam. Conducted from May to June 2024, the study surveyed 5,000 respondents across the five countries, including 1,000 from Vietnam.

Easing recession fears and inflation pressures in Vietnam

With Vietnam experiencing robust growth from early 2024, consumers declared greater confidence in the country's near-term economic stability, with a seven-percentage point decrease year-on-year in recession concerns over the next six to 12 months.

At 70%, the proportion of Vietnamese respondents confident in the country's economic future was also 18 percentage points above the regional average. Vietnamese consumers were also the most optimistic about personal finances, with 90% expecting to be financially stable or better off by June 2025, followed by Indonesia (89%) and Thailand (82%).

Despite recession fears easing from last year, 77% of Vietnamese consumers were still worried about financial-related matters, with Gen Z showing the highest level of concern (87%). Rising inflation remained the top financial worry, cited by 60% of respondents, followed by increased household expenses (53%). However, these figures represent a six-percentage point and nine-percentage point decrease respectively from last year’s levels, indicating reduced stress around domestic price increases.

Declining global inflation has eased Vietnam’s import price pressures, with the average import price index for the first nine months of 2024 down 1.73% year-on-year. Lower global oil prices have also positively impacted Vietnam’s consumer price index, which remains at 3.9% year-to-date, below the government target of 4.0-4.5%.

Increased spending on experiences and travel

Over the past year, Vietnamese consumers said they had increased spending on essentials. The top three items Vietnamese consumers said they spent more on were children’s education (42%), healthcare (33%), and utilities (33%).

Vietnamese consumers also spent more on experiences such as vacations, fine dining, concerts, and festivals than their regional peers, with 42% reporting increased expenditure in these areas compared to the ASEAN average of 35%. Younger consumers were more partial to experiences, in particular Gen Z with 47% of them saying that they had spent more on experiential purchases.

Regarding overseas spending, over 70% of Vietnamese consumers reported expenditures abroad within ASEAN over the past year, with Thailand and Singapore being the most popular destinations.

Savings and investment levels strong, but insurance coverage lags

ACSS 2024 found that close to 60% of Vietnamese consumers had set aside at least three months of expenses for emergencies, exceeding the regional average of 54%. Nearly half of respondents said they regularly save over 20% of their monthly income, driven mostly by Gen Y.

Appetite for investment was also robust, with 63% of Vietnamese consumers allocating over 10% of their income to investments, 10 percentage points above the regional average.

However, insurance coverage remains limited, particularly for critical illness and death and total permanent disability. While 86% of Vietnamese consumers hold basic health insurance, only 15% have critical illness coverage, lagging the regional average of 24%. Additionally, just 13% have death and total permanent disability insurance, four percentage points lower than the regional average.