Finance expert Nguyen Tri Hieu told Vietnam News that improvements in the country’s labour market would be the key force driving private consumption growth while lower levels of inflation would also boost spending.

According to reports from the General Statistics Office (GSO), labour market data for the second quarter of this year showed a decline in youth urban unemployment to 9.8 per cent from 10.6 per cent in the first quarter while overall urban unemployment remained stable at 3.1 per cent.

Vietnam’s unemployment rate is forecast low, at 3.4 per cent of the total labour force in 2019 for all demographic groups, remaining constant from 2018. This level is projected to be retained over medium terms to 2023.

The continued structural shift in manufacturing facilities from China to Vietnam, which is being expedited by uncertainty from the US-China trade war and the signing of the EU-Vietnam Free Trade Agreement on June 30 this year, has also provided a boost to the Vietnamese economy and improves the employment outlook.

Besides, further underpinning the positive consumer outlook is the fact that minimum wage growth continues to increase, albeit at a slower rate.

After a growth of 7.3 per cent and 6.5 per cent recorded in 2017 and 2018 respectively, the National Wage Council has continually increased the minimum wage by average of 5.3 per cent in 2019. In 2019, minimum wages range from VND2.92 million (US$125) to VND4.2 million, compared with VND2.8 million and VND4 million of 2018.

“Consumption of local people, especially the young, has been increasing significantly, given by the rising incomes and enhanced living standards,” Hieu said.

According to Euromonitor, per capita disposable income was at more than VND40 million last year and expects an average growth of 5.9 per cent annually in the 2019-30 period, leading to corresponding growth of consumer spending.

The middle-income class is also increasing rapidly and it was forecast that 49 per cent of households will have an annual disposable income of between $5,000 and $15,000, up from 33.8 per cent in 2018.

Meanwhile, the country’s inflationary pressures remain under control, providing further stimulus for spending.

GSO data showed that the country’s inflation cooled to 2.57 per cent in August 2019, down from 3.52 per cent in August 2018. The rate was the lowest rise for the past three years.

In 2019, inflation is projected to average at 2.9 per cent, buoyed by weak transport inflation due to a drop in average oil prices in the year.

The factors highlighted above are already having a positive impact on retail sales. In the GSO’s data release, retail sales grew by 11.6 per cent in July 2019, up from 11.1 per cent in July 2018. Indicative of an improving outlook over 2019 is the broader uptick in retail sales, with growth of 11.9 per cent average annually over the first seven months of 2019, up from the 10.2 per cent over the same period in 2018.

Analysts from Fitch Solutions Macro Research recently also forecast although slightly cooling this year, private consumption growth in Vietnam would remain robust, expanding by 6.5 per cent in 2019 and picking up further to 6.8 per cent in 2020.

“Retail sales in Vietnam have recorded double-digit growth rates and we expect this to hold over 2019. We highlight Vietnam as one of the most promising consumer markets in Asia Pacific, along with Indonesia, the Philippines, India and China,” Fitch analysts noted.

According to Hieu, local consumption will continually support Vietnam’s economic growth, especially when the global market slows and is becoming volatile.

“Robust domestic consumption will be an important driver for the country’s growth and help reduce dependence on exports,” Hieu said.

The information was revealed by Nguyen Viet Thang, President of the Vietnam Fisheries Society and head of the organising board, at a recent press conference on the biennial event.

The VietShrimp 2020 is hoped to host more than 200 booths of domestic and international businesses in the fisheries industry and the shrimp sector. Numerous symposiums will be arranged in the fair, he added.

Focusing on sustainable development of the shrimp industry, the fair will seek to bolster business connections and introduce new farming technologies and advanced models in the hope of raising quality and value of Vietnam’s shrimp sector.

The two previous editions of the event were held in the southern Bac Lieu province, which is home to about 120,000 hectares of shrimp cultivation area.

After continuous declines in the first months of 2019, overall shrimp exports also began to recover in July with an increase of 13.4 percent and reached 334 million USD thanks to businesses’ efforts to boost sales to such major markets as the US, China, and Australia.

Vietnam aims to earn 4.1-4.2 billion USD from shrimp exports this year, higher than the level of 3.6 billion USD recorded in 2018, according to the Directorate of Fisheries under the Ministry of Agriculture and Rural Development.

The Sourcing Fair for Supporting Industry with Buyers that opened in HCM City on September 11 seeks to enhance supply chain linkages in supporting industries, enhance direct connections between foreign and other manufacturing firms and Vietnamese parts suppliers.

Nguyen Phuong Dong, deputy director of the city Department of Industry and Trade, said the fair has attracted 26 foreign manufacturing companies such as Samsung, Daeyong Harness, GST Vietnam, Backer Heating, Minamida Vietnam, Hanel PT,  Daeyong Vina, Bosch, Nipro, Panasonic, and Datalogic Vietnam.

They are displaying more than 220 component and part clusters used in the electronics, mechanical, automation, aviation, auto, and medical fields and seeking suppliers for those parts, he said.

More than 70 Vietnamese parts manufacturers in HCM City and elsewhere are also taking part and around 300 business-to-business meetings were arranged between them and buyers, he said.

The SFS will also feature a seminar on “Market opportunities for supporting manufacturing industries” today (September 12) and a study tour of Japanese-owned Semitec Electronic Vietnam Co, Ltd to help local parts makers learn about 5S and Kaizen models.

Dong said SFS was held for the first time last year with 17 foreign companies in the automobile, electronics and mechanical sectors taking part and linking up with 80 Vietnamese supporting industry enterprises.

As part of its efforts to implement Decision 2869 of the city People’s Committee this year on the supporting industry development programme his department organises the annual fair, he said.

The expo is meant to help parts vendors tie up with manufacturing enterprises, helping increase the rate of local parts in products made in Việt Nam, he said.

Ngo Khai Hoan, deputy director of the Ministry of Industry and Trade’s Industry Agency, hailed the department’s efforts to link parts suppliers with product manufacturers.

“SFS is considered a very crucial activity to connect businesses and boost supporting industry growth.”

It helps local parts makers understand the needs of foreign manufacturers and meet their demands, and gradually participate in the global value chain, he added.

Organised by the city Department of Industry and Trade, the Saigon Hi–Tech Park and the HCM City Export Processing and Industrial Zones Authority, the event, which is held at  Convention Centre 272, ends on September 12.

VOV