HO CHI MINH CITY -- Vietnam's consumer confidence has plunged to a level not seen in at least 20 years, offering a bleak snapshot of the pandemic's persistent impact, even in a country that has quashed COVID-19 and has a growing economy.
In a poll from July that was released today, 5% of respondents said they expect the economy to be better this year than last.
That's a steep drop from the 70% confidence level from the same poll in January, before COVID, and a marked departure for Vietnamese, who typically rank as one of the world's most optimistic populations.
Infocus Mekong Research conducted the survey. Ralf Matthaes, Infocus's managing director, told Nikkei that the 5% reading is the lowest confidence rating in the two decades he's been surveying Vietnamese.
"Obviously people are going out less and isolating more," Matthaes said, citing both health and financial concerns. "The first one is behavioral, so they're going out less often, and the second one is financial."
The country has reported 1,095 coronavirus cases and 35 deaths. That's among the lowest rates globally, but locals, who no longer have to abide by a lockdown, are still reluctant to travel, dine out or go shopping, Infocus said.
Vietnam has one of the few economies forecast to expand in 2020, after registering 2.62% year-on-year growth in the third quarter. But the downturn in global trade has pummeled Vietnamese exports, leaving millions out of work or on reduced hours.
In response, the government has ramped up public spending and on Thursday cut the refinancing rate to 4% from 4.5% and the discount rate to 2.5% from 3%.
Many of the Southeast Asian country's roughly 100 million people are also tightening their belts, Matthaes said, downgrading to cheaper brands and making household necessities last longer.
As in many countries, more Vietnamese have moved their shopping online amid the pandemic. E-commerce will grow more than 30% this year, according to the Vietnam E-commerce Association.
But many consumers lack confidence in "faceless" online sellers, says Pham Que Anh, an independent expert on competition law and consumer protection.
"This is because the huge amount of information available on the internet might overwhelm or confuse them," she told Nikkei. "Secondly, people who are used to traditional commerce will also hesitate to engage in internet-based transactions, or buying from faceless sellers, as many call it."
She said stronger consumer protection laws are needed.
Consumers were more sanguine in June, when the virus appeared to be receding and Vietnam approached 100 days without an infection.
"We were pumped, we were ready," said Ken Duong, vice president of legal affairs at Duong Global Business Consulting Group. He told Nikkei that businesses thought they only had to weather one COVID wave and had been preparing to rehire and reinvest. Then came the second wave in July, and "you get hit again," he said. "It was much harder than the first time."
Now the economy is reopening. Routine international flights resumed in September and could lead to the return of tourism and trade as economic drivers in 2021. Though COVID has hurt consumption, Nielsen reported in August that Vietnamese were still more optimistic than most other nationalities. As of Friday, Vietnam has gone nearly a month with no local transmissions.
"We're almost corona-free," Matthaes said. The Infocus survey found three factors would encourage Vietnamese to start laying out cash for vacation packages, cars and other big-ticket items: job security, salary increases and a government assurance that the COVID threat is gone.