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Manufacturers told not to put high hopes on consumer market in 2012
Economists have warned that the difficulties of 2011 would continue in 2012, and that manufacturers should not put too high hopes on the consumption demand increases in 2012.
53,000 bankrupted businesses, higher unemployment rate and goods sharp price increases have been cited by economists to warn that difficulties are still ahead, and that the demand in 2012 would even be weaker than in 2011.
According to the General Statistics Office (GSO), the total retail sales of goods and consumer services in 2011 increased 24.2% over 2010. However, if not counting on the price increases, the increase would be less than five percent, the lowest increase over the last few years.
Vu Dinh Anh, a well known economist from the Ministry of Finance, said that the statistics have proved the tendency of people fastening their belt in the context of the high inflation.
Anh believes that one could consider three factors to forecast the consumption level in 2012 – the prices, income and the people’s confidence on the market.
If the prices could be kept stabilized, this would have positive impacts on the market. The price increase was the main reason which prompted people to put money in their coffers instead of buying goods. Therefore, if they feel that the prices would be stable and feel secure, they would increase spending.
The second important factor to be considered is the income of employees and workers. Of course, if they have more money, they would feel more secure about their life prospect, and they would spend more money to buy consumer goods.
And the third important factor is the confidence of people on the government’s economic management. If they believe that the economy recovers, they would spend more money on goods and services.
Vu Vinh Phu, Chair of the Hanoi Supermarket Association, thinks that the inflation rate in 2012 would be lower than that of 2011, but would stay high at 10-12 percent. Since more than 50,000 businesses went bankrupted in 2011, and many workers got redundant, the demand on the market is believed to stay weak in 2012.
Phu has predicted that in 2012, due to the scanty income and high prices, 70 percent of people’s spending would focus on food and essential goods. 20 percent of the richest people alone account for up to 40 percent of the society’s consumption.
Food safety would be the issue of the biggest interest in the time to come. “Contaminated milk, spoiled pork and goods with unclear origin on the market have been discovered recently, which would be the top concern of consumers in this year,” Phu predicted.
According to Phu, in 2012, the prices would continue going up, but the price increases would not be as sharp as seen in 2011. In fact, the price increases have been slowing down since the last months of 2011.
Warning about the weak demand, Phu said that only by restructuring their production, trying to cut down the production costs, will manufacturers be able to boost sales and maintain their normal production.
Nguyen Minh Phong from the Hanoi Socio-economics Institute, sharing the same view, said that most of analysis centers have predicted that there would be more difficulties in 2012 than in 2011.
He said that some products would see the prices decreasing such as luxurious goods or short-lived products, such as information technology products. Meanwhile, food products would become more expensive due to the bad weather and the high demand for essential goods.
“Food and foodstuff products would hold the majors positions in the market structure which would most affect the market prices. Domestically made consumer goods would be more consumed as people have more confidence on “made in Vietnam” goods, while imports are getting more and more expensive,” Phong predicted.
vietnamnet
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