Once war-torn and poverty-stricken, Southeast Asia is one of the world’s main growth spots. While developed economies stagger along, constantly on the brink of setting off another global recession, countries such as Myanmar and Indonesia are enjoying sustained economic expansion. Possibly the brightest economic star within the region is Vietnam, whose growing clout has been highlighted by a visit by US President Barack Obama and its inclusion in the Trans-Pacific Partnership (TPP), a major trade deal among Pacific Rim countries.
The past 20 years have been particularly fruitful for Vietnam, and this period was recently analysed by TNS Vietnam, the local branch of the global market research firm. TNS Vietnam just celebrated its 20th anniversary, and its report, 20 years of growth in Vietnam illustrates the dramatic changes economic growth has wrought.
Growth in Earnings
The most commonly used indicator of economic growth is a country’s Gross Domestic Product (GDP). Vietnam’s GDP growth remains among the highest in the world, at roughly 6 per cent per year, compared to the global average of less than 4 per cent. This is fantastic news, but it can be difficult to get a sense of how such growth impacts people in their daily lives.
For that, a more useful figure is GDP per capita, or what each person’s share of the national economy is. Vietnam’s growth in this regard has been remarkable. In 1996 the per capita income in US dollars was just under 1,600, according to the World Bank and the International Monetary Fund. Today, that figure sits just under USD 6,400, a fourfold increase.
Taylor Nelson Sofres’ (TNS’) VietCycle and Consumer Pulse reports meanwhile, show that workers in Vietnam’s biggest cities are earning about five times more than they did in 1999. TNS figures show that average monthly household income at the end of the 20th century was VND 3.6 million (US$ 160 in 2016 terms), while the number reached VND 17.2 million ($ 766) this year.
Such growth has brought about dramatic shifts in consumption within Vietnam.
According to TNS, in 1999 motorbikes, personal computers and washing machines were the products which people most aspired to. Today, cars, smart TVs and air conditioners are the most sough-after items, and even these are within the reach of more consumers than ever, as evidenced by the ongoing auto sales boom in Hanoi and Ho Chi Minh City.
The report also notes that travel, both international and domestic, is more accessible due to both rising income and the appearance of budget airlines, in addition to improved road networks. With Vietnam’s growth outlook for 2016 looking positive, such trends should only become more pronounced.
Confidence And Expectations
TNS has also tracked consumer confidence in recent years through their Consumer Confidence Index (CCI). This figure is based on Vietnamese expectations for the value of the Vietnamese dong, employment, the economy, and personal standard of living. In Q2 2016 the index hit 91, the highest ever recorded by TNS.
Ashish Kanchan, managing director of TNS Vietnam, notes that it can be difficult to maintain high consumer confidence after years of growth. This is best illustrated by the fact that in 1999, 80 per cent of respondents said they expected their personal standard of living to improve in the next 12 months, while the figure was 49 per cent this year.
This has more to do with a realistic view of economics than any problems with growth, though. “(Consumers) are also realizing that even though the country continues to grow rapidly, improvements to daily life will become more gradual than in the early days,” Kanchan said in the report.
“Still, 96 per cent of Vietnamese expect stability or improvement in their standard of living.” This is a remarkably optimistic outlook, especially amid regular headlines warning of the impending doom of traditional economic stalwarts such as the European Union.
The expectations of what role members of society should fill have also shifted during this period of impressive growth.
In 1999 TNS found that 78 per cent of consumers believed women should focus on traditional roles, while the firm’s latest Consumer Pulse report placed that figure at 51 per cent. This is in line with the increasing confidence with which young Vietnamese women are entering the workforce.
Vietnam’s economic growth over the past two decades has brought major change to nearly every aspect of society, and the country stands as one of the best examples of how growth can lift large segments of the population out of poverty in a relatively short time period.
To be sure, challenges remain, especially in the form of national debt and bloated state-owned enterprises, and a global economic downturn would hurt the export-driven economy, but for now Vietnam’s future looks just as bright as its recent past.
- Vietnam Sees Strong Economic Growth Despite Incomplete Reforms (VOANews)
- Vietnamese Growth Slows to 5.46% in Q1 2016 (Vietnam Briefing)
- TNS reviews 20 years of growth in Vietnam (Tuoi Tre News)
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