VietNamNet Bridge – A report says two-thirds of Vietnam’s GDP comes from individual consumption, including purchases made by Vietnamese smitten with luxury goods.

Thoi bao Kinh te Saigon has quoted a survey by Roy Morgan as saying that Vietnamese are major customers for luxury brands, though income per capita in the country is less than $2,000 a year.

Vietnam, which has a high percentage of young consumers, is now a hot market for Apple. The smartphone manufacturer said that its sales soared by threefold within the first three months of the year, and a two-fold increase could be seen every quarter. The high growth rate still continues.

Today’s Vietnamese consumers have two different consumption behaviors. Many try to practice thrift because of the obsession about their difficult days in the past. Others tend to spend money like water, using luxury goods as a way to offset their difficult days in the past.

Fifty-six percent of Vietnamese are aged under 30, and they are especially keen for branded goods. They like to show off to their friends and colleagues what brands they prefer and how much the goods cost.

An online survey conducted by Nielsen of 29,000 people in 58 countries worldwide has given the same result. Fifty-six Vietnamese polled said they were willing to spend big money on luxury items.

The survey found that Vietnam ranked third in the world in terms of fondness for branded goods, just below China (74 percent) and India (59 percent).

Income has been increasing rapidly in recent years, but is still much lower than the other Asian countries. However, consumers are surprisingly becoming one of the most extravagant spenders in the region.

Bui Trinh, a renowned economist, pointed out that the way Vietnamese spend money on luxury goods is not positive for the national economy. He said that he disagreed with the  opinion that high spending would help develop the national economy.

Trinh, in an interview given to Dat Viet, said that people have a misunderstanding about the GDP figures.

According to the General Statistics Office (GSO), in 2012, income per capita was VND2 million a month. The figure was VND2.2 million in 2013.

“These are very modest income levels which cannot ensure good lives for people, especially those in rural areas,” Trinh noted.

The statistics released by GSO also showed that the average spending per head was $1,229 in 2012 and $1,372 in 2013, while income per capita was $1,152 and $1,280, respectively.

“The figures show that the majority of people not only cannot save money, but they also have to borrow money to cover basic daily needs,” Trinh said.

“This is really a significant danger, which shows that the high GDP growth rate does not have any significance to people,” he added.

Pham Chi Lan, also a renowned economist, commented that once the middle class spends money on branded luxury goods, this would not be good for domestic production.

Dat Viet