MWG's October 2022 revenue reached VND10,884bn (3.3% mom, -10.7% yoy) despite entering the 4Q22 peak consumption season and preparing for big events like the World Cup.

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The General Statistics Office reports that the low base year of 2021 helped the total retail sales of goods and services increase by a healthy 25.3% yoy in 10M22. Retail sales increased by 16.8% yoy when the price element is taken out, exceeding pre-pandemic levels. Despite resuming international flights in the first quarter of this year, Vietnam's tourism revenue increased from 2021 to 78% of pre-pandemic levels.

According to Google statistics, Vietnam's mobility to retail and recreation has climbed by 4.6% during the pre-epidemic period, while mobility to groceries and pharmacies has grown by 27.5%.

Retailers' and beverage companies' 9M22 business results showed a resurgence in consumer spending power. In 3Q22, PNJ reported a net profit of VND252 billion, up from a loss of VND160 billion, while VRE's net profit increased 32 times year over year. It was noted that stringent social segregation was put into place in Vietnam in 3Q21. Additionally, SAB's net profit increased 2.0 times year over year in 3Q22, resulting in an increase of 76.9% in 9M22.

Due to the high stocking demand in 3Q21 and the rising input prices (grains, whole milk powder, etc.), food producers had a poor performance on a year-over-year basis.

Mr. Phan Nhu Bach, an analyst at VNDirect, believes the quantum of pent-up demand is dimming while rising interest rates and weak VND push consumers to tighten up their purse strings. Besides, there is the fading of the "wealth effect", the psychological phenomenon that refers to a change in consumer spending patterns following a rise in the value of unrealized assets. All investment channels (stock market, property market, bond market, digital asset market, etc.) enjoyed a strong rise in 2021. As all these markets have entered sharp corrections this year, which have scaled down the unrealised asset value, this will dent consumer spending power.

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Most labor-iintensive industries are facing headwinds. As a result of weakening global demand, Vietnam's export growth is expected to slow, forcing industries such as textiles, footwear, aquaculture, and wood processing to reduce production.

Since November 20, 2022, Taiwanese footwear producer PouYuen Viet Nam Co., Ltd., the largest company in Ho Chi Minh City in terms of number of employees with more than 50,000 workers, has given workers rotational leave for the next 3 months due to order cutbacks.

According to the Binh Duong Department of Labor and Social Affairs, one of the industrial centers in the South, in 10M22, about 28,000 workers had to suspend their labor contracts and 240,000 people had their working hours reduced. This fact is equivalent to about 20% of the workforce in Binh Duong having been affected by the downturn of the economy, and this proportion may increase in the near future.

Some retailers have signaled a pullback in consumer spending since October 22. MWG posted October performance with a clear decline in consumer demand for consumer electronic and mobile phone products, while the grocery segment is still in a recovering phase. MWG's October 2022 revenue reached VND10,884bn (3.3% mom, -10.7% yoy) despite entering the 4Q22 peak consumption season and preparing for big events like the World Cup. DGW also released preliminary October results, which showed a 40% year-over-year drop in revenue due to lower-than-expected sales volumes of smart phones and consumer electronics products (TVs).

Mr. Phan Nhu Bach anticipates that Vietnam consumption will be hard hit in 1H23F and gradually recover since 3Q23 as a result of: 1) rising interest rates slowing in FY23F as the Fed rate gradually eases down; 2) a gradually stabilizing macro in Vietnam, which will help to increase people's confidence in consumption; 3) the recovery of consumption in the EU and US regions, which will bring back orders to Vietnam industrial zones; and 4) the National Assembly passing a resolution on the State budget estimate in 2023 with from July 23, the base salary will be increased by 20.8% compared to the current of VND1.8m per month, which can increase the income of the cadres and civil servants in Vietnam.