{"id":23224,"date":"2023-11-08T16:08:36","date_gmt":"2023-11-08T09:08:36","guid":{"rendered":"https:\/\/staging.cimigo.com\/?p=23224"},"modified":"2023-11-08T16:08:36","modified_gmt":"2023-11-08T09:08:36","slug":"vietnams-economic-recovery-post-covid","status":"publish","type":"post","link":"https:\/\/staging.cimigo.com\/id\/trends\/vietnams-economic-recovery-post-covid\/","title":{"rendered":"Vietnams Economic Recovery Post-Covid"},"content":{"rendered":"<h2>Vietnams Economic Recovery Post-Covid<\/h2>\n<p>This article looks at navigating Vietnams economic recovery post-Covid.\u00a0 Vietnam is open for business again in October 2021, after four months of economic interruptions in efforts to protect health and save lives.\u00a0 The mid-term prospects for Vietnam\u2019s economic recovery are strong.<\/p>\n<p>However, consumer spending will only return to pre-pandemic 2019 levels after 18 to 24 months. This pandemic will force a sharp drop in discretionary expenditure.\u00a0 There will be GDP growth of approximately 2.4% in 2021. This is the lowest level since 1986 which recorded a 2.3% growth. It will be less than 2020 which recorded 2.9% and in sharp contrast to the 7.0% growth achieved in 2019.\u00a0 Consumer dynamism and economic growth will rebound unabated by mid-2023.<\/p>\n<p>6 minute read.<\/p>\n<p><!--more--><\/p>\n<p style=\"text-align: center;\"><a class=\"wp-block-button__link has-background\" style=\"background-color: #a6cc17;\" href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/vietnams-2021-economic-recovery-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Download Vietnam\u2019s 2021 Economic Recovery Prospects\u00a0<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-18994 size-large\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-1024x1024.jpg\" alt=\"Vietnam Q3 2021 economic progress 2021\" width=\"640\" height=\"640\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-1024x1024.jpg 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-300x300.jpg 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-150x150.jpg 150w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-768x768.jpg 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-600x600.jpg 600w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post-100x100.jpg 100w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Q3-2021-post.jpg 1080w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<p>&nbsp;<\/p>\n<h2>Manufacturing challenges ahead in Vietnam<\/h2>\n<p>The <a href=\"https:\/\/staging.cimigo.com\/en\/research-report\/\" target=\"_blank\" rel=\"noopener\">Vietnam manufacturing purchasing managers index<\/a> highlights the impact on one important sector which accounts for nearly one-quarter of GDP.\u00a0 As the indices drop below 50 a decline and as production output is experienced. The main index demonstrates the hit to production over the past four months.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19008 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021.png\" alt=\"Vietnam PMI 2021\" width=\"1827\" height=\"679\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021.png 1827w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-300x111.png 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-1024x381.png 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-768x285.png 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-1536x571.png 1536w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-1320x491.png 1320w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vitenam-PMI-2021-600x223.png 600w\" sizes=\"auto, (max-width: 1827px) 100vw, 1827px\" \/><\/p>\n<p>Other indices with September 2021 indices shown in parenthesis show low output (28), logistic issues with supplier delivery times (29) and far fewer workers employed (38 \u2013 the lowest ever).\u00a0 Backlogs of work are building (60) and input prices are rising (66).<\/p>\n<p>The recovery in 2020 was fast. In 2021 navigating Vietnam&#8217;s economic recovery post-Covid will be hampered by a lack of confidence, the ability to return to full capacity in ongoing social distancing restrictions, logistics slowing the movement of goods between provinces, global shipping container supply shortages and hikes in shipping costs.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19009 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Drewry-World-Container-Index.png\" alt=\"Drewry World Container Index 2021\" width=\"795\" height=\"455\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Drewry-World-Container-Index.png 795w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Drewry-World-Container-Index-300x172.png 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Drewry-World-Container-Index-768x440.png 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Drewry-World-Container-Index-600x343.png 600w\" sizes=\"auto, (max-width: 795px) 100vw, 795px\" \/><\/p>\n<p>Many production workers migrate to production hubs (approximately 3,500,000 workers migrate to HCMC, Dong Nai, Binh Duong and Long An), when many lost their jobs during the lockdown, they were unable to return to their homes in the provinces, often small towns and rural areas. These families experienced extreme hardships and anxiety from a combination of no income to cover daily necessities and Covid concerns.<\/p>\n<p>Many workers desire to go home to the safety and stability afforded by their provincial family homes.\u00a0 The agricultural economy acts as a sponge to this workforce, they have shelter, can eat, but are grossly underemployed.\u00a0 As the lockdown restrictions have eased many have left and others are waiting to return home.<\/p>\n<p>Getting them to come back to production hubs again before Tet (lunar new year) in late January 2021 will be difficult. Harvest is fast approaching for many communities with rice sowing expected in the Mekong Delta in November and December and coffee harvest expected in October in the Central Highlands.<\/p>\n<h2>Kick-starting the Vietnams economic recovery requires boosting consumer confidence<\/h2>\n<p>For these migrant workers particularly and consumers generally, confidence is extremely low with an absolute fall of over 60% compared to 2019.\u00a0 Building confidence is critical to navigating Vietnam&#8217;s economic recovery post-Covid and attracting people back to work and to encouraging consumer spending. Some key factors to encourage consumer confidence include;<\/p>\n<ol>\n<li>Achieving full vaccination. As of 10\/10\/21; Nationally 16%, HCMC 75%, Long An 66%, Hanoi 47%, Binh Duong 43%, Dong Nai 22%<\/li>\n<li>Workplace hygiene and safety.<\/li>\n<li>Home office flexibility for white-collar employees, not only for convenience but also as schools remain online only.<\/li>\n<li>Back to school especially for those not living in multi-generational homes, as 96% and 88% of adult men and women respectively work.<\/li>\n<li>Medical costs and income protection if infected with Covid.<\/li>\n<li>Income security if a lockdown is repeated. Migrant workers suffered badly in the last lockdown.<\/li>\n<li>Inter-provincial travel so that if required migrant workers can return to their provincial homes but also enable workers to commute for those crossing provincial borders on a daily basis.<\/li>\n<\/ol>\n<p style=\"text-align: center;\"><a class=\"wp-block-button__link has-background\" style=\"background-color: #a6cc17;\" href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/vietnams-2021-economic-recovery-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Download Vietnam\u2019s 2021 Economic Recovery Prospects\u00a0<\/a><\/p>\n<h2><strong>2021 economic impact far harsher than 2020 in Vietnam<\/strong><\/h2>\n<p>The economic impact of Covid is unprecedented in peacetime, the impact in 2021 is a much harder impact than 2020. Navigating Vietnam&#8217;s economic recovery post-Covid in 2021 and beyond will be far harder than experiences to date.\u00a0 Cimigo estimates that 1.6 million jobs were lost in 2020 compared to 5.9 million lost in 2021.\u00a0 Many employees and micro and SME business owners have lost significant levels of income through salary reduction and revenue declines respectively. Cimigo estimate that household incomes diminished by 12% in 2020 and forecast that they will diminish by 38% in 2021.<\/p>\n<h2><strong>Vietnam retail sales of goods expected to bounce back within 6 months<\/strong><\/h2>\n<p>Vietnam retail sales react quickly to lockdowns and lower-income levels. \u00a0The chart below shows monthly retail sales of goods (not services) indexed against September 2019 at 100.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19010 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021.png\" alt=\"Vietnam retail sales of good 2021\" width=\"1845\" height=\"772\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021.png 1845w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-300x126.png 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-1024x428.png 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-768x321.png 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-1536x643.png 1536w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-1320x552.png 1320w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Viuetnam-retail-sales-of-goods-2021-600x251.png 600w\" sizes=\"auto, (max-width: 1845px) 100vw, 1845px\" \/><\/p>\n<p>Vietnam retail sales of goods recovered quickly after the 2020 lockdown but did not have the time to build the momentum of growth experienced in 2018 (15% year on year) and 2019 (12% year on year) growth.<\/p>\n<h2><strong>Vietnam retail sales of services are expected to edge back over 18 to 24 months<\/strong><\/h2>\n<p>Vietnam retail sales of services have been hit far harder.\u00a0 This includes tourism, hospitality and other services. In absolute terms, pre-pandemic retail services equate to 30% of the value of retail goods sales.<\/p>\n<p>The chart below shows monthly retail sales of goods versus services, indexed against September 2019 at 100.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19012 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021.png\" alt=\"Vietnam retail sales of goods vs. services 2021\" width=\"1822\" height=\"848\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021.png 1822w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-300x140.png 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-1024x477.png 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-768x357.png 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-1536x715.png 1536w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-1320x614.png 1320w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-retail-sales-of-goods-vs.-services-2021-600x279.png 600w\" sizes=\"auto, (max-width: 1822px) 100vw, 1822px\" \/><\/p>\n<p>Services never truly bounced back from the pandemic experience in 2020 and have taken a severe hit in 2021. Restrictions preventing travel and closing hospitality and many other services explain the impact but the rebound is far harder to achieve because many such services are discretionary and not essential household expenses.<\/p>\n<p>Cimigo does not expect a return to 2019 pre-pandemic expenditure levels for 18 to 24 months after these services are allowed to re-open and operate normally. Rebuilding consumer confidence will be key to encouraging discretionary expenditure. In 2019 discretionary expenditure accounted for 33% of all household expenditure.<\/p>\n<p style=\"text-align: center;\"><a class=\"wp-block-button__link has-background\" style=\"background-color: #a6cc17;\" href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/vietnams-2021-economic-recovery-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Download Vietnam\u2019s 2021 Economic Recovery Prospects\u00a0<\/a><\/p>\n<h2><strong>Expect a challenging and subdued TET in Vietnam<\/strong><\/h2>\n<p><a href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/tet-vietnam\/\" target=\"_blank\" rel=\"noopener\">TET is a time for renewal, celebration and connecting<\/a> with family in Vietnam. \u00a0\u00a0TET is a huge financial burden to household budgets in gifting, food and beverages to serve to guests and premiumisation of the brands used.<\/p>\n<p>TET is an important consumption occasion for many categories locking in near 30% of annual sales in just 6 weeks.\u00a0 \u00a0TET will see subdued expenditure in pre-TET hospitality, grocery spending and gifting. The impact on retailers and many consumer-packaged goods companies will prevent growth in 2022.<\/p>\n<h2><strong>Vietnam consumer shifts in expenditure<\/strong><\/h2>\n<ol>\n<li>Consumer packaged goods (CPG) will largely be stable in 2021. A subdued TET will prevent growth in 2022 for many.<\/li>\n<li>Income shortfalls derail premiumisation of CPG.\u00a0 Down trading in CPG will continue through 2021 and 2022.<\/li>\n<li>Planned high ticket purchases are (again) delayed. Vehicles and appliances are expected to recover in Q1 2023.<\/li>\n<li>Discretionary expenditure will be constantly re-evaluated. Localised periodic Covid scares create high volatility for discretionary expenditure. Low confidence simply equates to low discretionary spending.<\/li>\n<li>Premium luxury consumer packaged goods and durable goods hold steady.<\/li>\n<\/ol>\n<h2>Vietnamese consumer demand shrinks in 2020 and 2021<\/h2>\n<p>The categories depicted below saw a contraction of sales in 2020 and 2021. The decline is more marked for those to the left of the chart below. Outbound travel, out-of-home entertainment, domestic travel, eating out of home, spa and beauty services all experienced massive declines in demand.<\/p>\n<p>High ticket vehicles and durables suffered as purchases are delayed.\u00a0 New apartment sales, cars, home appliances are goods that consumers defer purchases until such time that their confidence rebounds.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19013 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021.jpg\" alt=\"Vietnam consumer demand shrinks 2021\" width=\"1134\" height=\"649\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021.jpg 1134w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021-300x172.jpg 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021-1024x586.jpg 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021-768x440.jpg 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-shrinks-2021-600x343.jpg 600w\" sizes=\"auto, (max-width: 1134px) 100vw, 1134px\" \/><\/p>\n<h2>Vietnamese consumer demand accelerates in 2020 and 2021<\/h2>\n<p>In contrast, the categories and channels depicted below saw their historic growth accelerate (often dramatically) in 2020 and their momentum continues in 2021. The growth is more marked for those to the left of the chart below.<\/p>\n<p>Those categories and channels above the arrow will see their growth endure, spurred forward by Covid and fundamentally altering how consumers in Vietnam behave. These changes in behaviour will not reverse as Covid dissipates. Those categories below the arrow are shifts in consumer expenditure that will not endure, as they are reactionary behavioural changes brought about by Covid.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-19014 size-full\" src=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021.jpg\" alt=\"Vietnam consumer demand grows 2021\" width=\"1138\" height=\"636\" srcset=\"https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021.jpg 1138w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021-300x168.jpg 300w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021-1024x572.jpg 1024w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021-768x429.jpg 768w, https:\/\/staging.cimigo.com\/wp-content\/uploads\/2021\/10\/Vietnam-consumer-demand-grows-2021-600x335.jpg 600w\" sizes=\"auto, (max-width: 1138px) 100vw, 1138px\" \/><\/p>\n<p style=\"text-align: center;\"><a class=\"wp-block-button__link has-background\" style=\"background-color: #a6cc17;\" href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/vietnams-2021-economic-recovery-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Download Vietnam\u2019s 2021 Economic Recovery Prospects\u00a0<\/a><\/p>\n<h2>Expect thriftiness from Vietnamese consumers in 2022<\/h2>\n<p>Consumer confidence has hit new lows, businesses have faltered, jobs have been lost and incomes reduced. \u00a0Many sectors will remain distressed, especially tourism, the airline, leisure and hospitality industry.<\/p>\n<p>Disposable incomes have been severely impacted and uncertainly will reign at the forefront of consumer minds.\u00a0\u00a0Spending beyond necessities will remain suspended. Greater value will be sought across household expenditures.<\/p>\n<p>Vietnamese consumers will trade down their brand choices to save money. Consumers will shop more frequently but in smaller quantities. They will seek to conserve cash in their pockets. Cash outlay will trump price sensitivity. \u00a0A minority of affluent consumers will seek value in bulk, multi-serve and large pack purchases.<\/p>\n<p>Vietnamese consumers will seek lower-cost channels. They will go out of their way to find better prices and Vietnamese consumers will pay greater attention to promotions.\u00a0 To protect your brand whilst providing value in your promotions, is a tough balancing act.<\/p>\n<p>Retail sales in Vietnam grew 12% in 2018, 15% in 2019 and just 2.6% in 2020.\u00a0 Consumer spending will only return to pre-pandemic 2019 growth levels after 18 to 24 months. This pandemic will force a sharp drop in discretionary expenditure.\u00a0 In Vietnam during 2019 (pre-pandemic) 33% of household expenditure was on discretionary items.<\/p>\n<h2>Consumer dynamism and Vietnams economy will rebound unabated by mid-2023<\/h2>\n<p>There will be a GDP growth of approximately 2.4% in 2021. This is the lowest level since 1986 which recorded a 2.3% growth. It will be less than 2020 which recorded a 2.9% growth and in sharp contrast to the 7.0% growth achieved in 2019.<\/p>\n<p>By mid-2023, Vietnam will witness consumer dynamism and economic growth rebound unabated.\u00a0\u00a0The pace of positive economic progress and consumer dynamism will return to the level seen in 2019, then quicken and outpace other developing markets.<\/p>\n<p style=\"text-align: center;\"><a class=\"wp-block-button__link has-background\" style=\"background-color: #a6cc17;\" href=\"https:\/\/staging.cimigo.com\/en\/research-reports\/vietnams-2021-economic-recovery-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Download Vietnam\u2019s 2021 Economic Recovery Prospects\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Vietnams Economic Recovery Post-Covid This article looks at navigating Vietnams economic recovery post-Covid.\u00a0 Vietnam is open for business again in October 2021, after four months of economic interruptions in efforts to protect health and save lives.\u00a0 The mid-term prospects for Vietnam\u2019s economic recovery are strong. However, consumer spending will only return to pre-pandemic 2019 levels [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":19007,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[960],"tags":[1026,1014],"class_list":["post-23224","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-riset-pasar-vietnam","tag-riset-pasar-ekonomi-vietnam","tag-riset-pasar-vietnam"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Vietnams Economic Recovery Post-Covid - Market research Vietnam Indonesia<\/title>\n<meta name=\"description\" content=\"Vietnams Economic Recovery Post-Covid. 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