Financial Focus in Vietnam: Consumers Opt for Savings Amid Economic Optimism
In the heart of Hanoi’s Hoai Duc District, Thu Ha has a clear financial goal: to pay off her remaining home loan of VND 100 million (approximately US$3,900) before the Lunar New Year in January 2025. Alongside this goal, she is determined to bolster her rainy day fund. After receiving a raise last month, Thu Ha remains committed to saving, exemplifying a trend among many Vietnamese consumers.
A Prudent Approach to Spending
Thu Ha’s family has significantly altered their spending behavior, choosing to forgo dining out or indulging in snacks except for special occasions. This disciplined approach has allowed them to save nearly VND 2 million more per month. This behavior mirrors a growing sentiment among consumers in Vietnam who are placing a premium on savings over spending.
Rising Optimism Meets Caution
Market research firm Nielsen IQ’s latest survey paints a picture of cautious optimism among Vietnamese consumers. In the third quarter, 45% of respondents believed that the economy isn’t in recession, marking a 3 percentage point increase from the first quarter. Moreover, a significant 67% reported improvement in their financial situation compared to a year ago. However, this optimism has not translated into increased spending. Instead, many consumers are saving more than ever.
A Shift Towards Saving
The survey revealed that a remarkable 83% of Vietnamese adults have begun saving money, with 72% motivated by long-term financial goals. This reflects a 6-point increase from the previous year. As Thao Huynh, head of Vietnam industry research at Nielsen IQ, points out, rising healthcare costs are a major concern, prompting many individuals to establish emergency funds.
Half of those surveyed indicated that escalating healthcare expenses are their foremost worry, leading to an increased focus on savings to prepare for potential health-related challenges.
Lifestyle Adjustments for Financial Wellness
To save money, 73% of respondents reported that they only purchase essentials, while 47% are opting to spend more time at home, which allows them to save on commuting and leisure expenses. Working from home has emerged as a practical solution for cutting costs, aligning with a more cautious attitude toward recreational spending.
Retail Dynamics in Transition
Despite the shift towards saving, the growth of retail sales of goods and services has slowed down. The General Statistics Office noted that growth fell to 8.5% year-on-year in the third quarter, a decline from 9.8% previously. Conversely, bank deposits saw a rise of 6%, reaching VND 6.92 quadrillion in August, indicating a strong preference for saving.
Quality Over Quantity in Consumer Choices
Interestingly, this trend of belt-tightening doesn’t equate to a decline in the purchasing of quality goods. Consumers remain willing to invest in healthier food options, such as organic products, driven by concerns over their long-term health. The awareness of lifestyle diseases like diabetes and heart conditions has shifted priorities towards preventive measures.
E-Commerce Surge
While traditional retail faces challenges, the e-commerce sector is flourishing. A survey found that 61% of respondents are turning to online shopping to save money. The e-commerce market in Vietnam is projected to reach US$22 billion this year, an impressive 18% growth from 2023. Prominent online platforms like Shopee and Lazada have reported significant spikes in customer orders during promotional events, as consumers seek discounts.
Lazada’s Chief Operating Officer, Doan Trang Ha Thanh, anticipates increased traffic and sales volume, particularly during the year-end peak shopping season, as the platform prepares special discounts and promotions.
Conclusion
The evolving economic landscape in Vietnam sees consumers like Thu Ha exemplifying a noteworthy shift towards savings and prudent financial management. Through lifestyle adjustments and embracing online shopping, the Vietnamese population is navigating economic challenges with a blend of optimism and caution.