Vietnam is forecast to have around 48 million people, nearly half of the population, whose daily income would hit over US$20 by 2030 (in 2011 purchasing power parity, or PPP).

This would put Vietnam among the world’s top 10 largest consumer markets by 2030, according to findings from HSBC’s latest report titled “Asia’s shoppers in 2030”.

In the Southeast Asian region, Vietnam would surpass Thailand by that time, with the latter having around 38 million people with a daily income of over $20.

Vietnam, therefore, is expected to be among the countries with the fastest growth in its consumer markets – that is, the population earning more than $20 per day, along with India, the Philippines, and Indonesia, while South Korea and Japan will see a drop in the overall market by 2030.

The report also pointed out the rapid rise of Vietnam’s upper-middle class size (with a daily income of $50-100), averaging 17% until 2030.

HSBC expected the expansion of the middle and upper-middle class would serve as the driving force for the development of consumer markets.

Locals at a supermarket. File photo

In this context, Vietnam is expected to record an average of 8% growth in consumer spending in this current decade (2021-2030), the biggest increase in Asia, followed by Bangladesh, India, mainland China, and Indonesia.

In Asia, the middle-class population is expected to grow at a compounded annual growth rate (CAGR) of 2.1% until 2040e and what is defined as the “upper middle class” – those who spend $51-110 per person per day – is set to grow at nearly triple that rate at a CAGR of 5.9%.

The number of people in the highest bracket, that spend over $110 every day, is expected to rise from 27 million in 2021 to 50 million by 2030 and balloon to 164 million in 2040. By then, Asia will have more people in this high-income bracket than either Europe or the US, noted the report.

in terms of size, mainland China is expected to retain its dominant position as the biggest consumer market in the world with more than 800 million consumers by 2030 and 820 million by 2040.

And the number of consumers in mainland China making more than $50 per day is expected to reach 420 million by 2030, growing at a CAGR of 8.4% vs a CAGR of just 0.5% in the US (over the same period).

What will people purchase?

HSBC noted as income rise, people shop for different items. Typically, spending on necessities such as food and clothing (being necessities) falls while spending on health, leisure, and recreation rise.

According to the report, spending on recreation and transport is expected to rise the fastest, at more than 7% p.a. over the current decade. Conversely, food expenditure is expected to see its lowest growth at just 5% p.a. over the same period.

In addition, categories such as financial products, recreation, automobiles, computer equipment, and household services will grow fastest across Asia, and financial services is a category that will grow fast across most countries in ASEAN, India as well as China.