“Vietnam finds itself in remarkable stead, having bucked the regional slump into trade-recession, and is the only economy in Asia to post positive export and import growth. This is an environment where consumer confidence – certainly pride –should be flourishing. Instead, consumer confidence fell sharply in August.
"From an economic perspective, we can see triggers for the decline, but not a justification for the magnitude of the declines.
"During the month, Vietnamese policy makers had resorted to unexpected policy action such as widening the exchange rate band and eventually moving towards a third unexpected devaluation. The surprise devaluation of the Chinese yuan earlier in the month may have also triggered concerns about a loss of Vietnamese competitiveness.
"In our view, the declines in the 12-month and five-year outlook suggest that Vietnamese households may have interpreted prudent policy action by the authorities as signs of weakness. However, the rolling devaluations of the Dong during the late 2000s were aligned with economic under-performance and domestic problems, while the Dong devaluations in 2015 are aimed at ensuring that an out-performing economy does not see its trade competitiveness wane due to a misaligned exchange rate.
"The fact that domestic gold prices have remained low suggest that the fall in confidence has not driven people to seek shelter at one of Vietnam’s favourite safe havens.
"With the Vietnamese economy remaining sure and steady, we note that households are very sensitive to economic news, but expect confidence to stabilise eventually, in line with a resilient economy.”