Recession? What recession?

While the world continues to fret and predict doomsday, we in Vietnam are not in an ‘R’ – a recession. We are growing and will continue to do so.


If you keep talking about the worldwide ‘crisis’, the ‘R’ index will increase – this is the number of times the daily press reports the dreaded ‘R’ word in headlines. The ‘R’ index correlates with the reality of us going into recession. So, to one of the best words in Vietnamese. Im or ‘be quiet’. None of us wants the ‘R’.


Why does the ‘R’ index affect reality? It is a state of mind. Confidence is merely a perception and this perception REALLY affects how and when people shop. So, please. Im.


Contraction or Expansion?


A recession requires two consecutive quarters of economic contraction – not just slower growth but shrinkage. Although affected, Vietnam is one of 12 countries that in 2009 will continue to grow. Four are in Asia: China, India, Vietnam and Indonesia. So if you are in this country you are extremely fortunate. The predictions of 6.5 percent growth look to be a little off, but the economy will expand by between 3 and 4 percent this year. For that we are blessed.


Yes people in Vietnam are worried, but the domestic local economy remains strong. You may be facing the ‘R’ reality of being dependent on exports to economies that have lost all confidence and stopped shopping as a past time. If you are – and I know many suffering through this pain - my heart goes out to you because exports have fallen and will do so by around 40 percent this year. But they will bounce back in 2010, so do your best to hold on.


Domestically the Vietnamese are not feeling the pain. How can I say this? The company that (still) gainfully employs me ( has monitored consumer confidence monthly since 2006. So if you want the word on the Vietnamese economy, here it is. Consumer confidence was at its lowest in August 2008. Since then it has seen month on month gains up to and including March 2009.


Spending & Petrol


Why? Because in July 2008 petrol prices hit the highest ever in any Vietnamese memory at VND19,000 a litre. Since then they have fallen back to VND11,000 a litre (a price last seen in April 2007). Petrol prices in Vietnam show the highest correlation with consumer confidence, even despite the dizzy inflation levels of 2008.


The reason for this is weekly cash outlay. We have to buy petrol regularly for our motorbikes and cars, and it is the living cost that has the most direct impact on our living expenses.


“I spend, I have no choice,” people say. “I feel the pain and it hurts.”


Not surprisingly they lose confidence.


It is not consumer price inflation, the global crisis, the credit crisis, AIG bonuses or the Vietnam stock market indices that impact people. What affects the consumer is weekly expenses, their tien cho (market money).


Stream or Flood?


For those of you who want to discuss the ‘trickle down effect’ - the idea that as exports shrink, investment shies away, job losses follow, economic growth slows and will impact the local economy - well it’s all true.


But, for the past decade Vietnam’s economy has grown at an average of 7 percent a year. 2009 will see it fall to 3 or 4 percent. Yes, it will be a tough year, but it’s not an ‘R’ and Vietnam is the most progressive nation of the 12 growing in 2009.


We won’t trickle back. Vietnam will bounce back with a vigour that will leave other nations quivering in awe. Bring on 2010 and see me go, Vietnam.

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