CCI advances in September: ANZ

The small gain in September was driven by increased optimism about the country’s overall economic prospects in the next year and over the next five years.

ANZ Chief Economist South Asia, ASEAN & Pacific, Glenn Maguire said Vietnam continues to find itself in the remarkable stead of being the only Asian economy not recording negative import and export growth. It is strongly bucking the regional trade recession. However, dynamics within the Vietnamese economy will clearly not be immune to a weaker global trade environment and the September confidence survey may contain the first hints of caution among local consumers.

There is a very clear split between short term personal financial sentiment and the medium to longer term outlook for the economy. 

It is notable that fewer households currently feel better off, compared to a year ago, and expect to be better off in one year from now. However, at the same time that confidence in the personal financial assessment has been waning, confidence in the nation’s medium to longer term economic outlook has picked up rather strongly.

The short term assessment on personal finances may have been eroded by policy decisions to weaken the Dong and widen its trading band in August, measures which will make imports more expensive for the average Vietnamese household.  However, over the medium term this is a prudent policy choice that will retain Vietnam’s export competitiveness and ensure continued insulation from the regional trade recession.

“We think a sharp erosion in confidence in Vietnam is highly unlikely. Our expectation of resilience stems from Vietnamese trade performance in the coming months, thanks to strong FDI inflows in recent years,” Maguire said.