Stimulate consumption, increase total retail sales at the end of the year

In the first 9 months of 2024, domestic consumption will recover but not at a high level. Promoting consumer demand and increasing total retail sales is the current task.

Final consumption has a slow and short step.

According to the General Statistics Office, the total level retail Total retail sales of goods and consumer services at current prices in September 2024 are estimated at VND 535.8 trillion, up 7.6% over the same period last year. In the first 9 months of 2024, total retail sales of goods and consumer services at current prices are estimated at VND 4,703.4 trillion, up 8.8% over the same period last year (up 10.1% over the same period in 2023), excluding price factors, the increase is 5.8% (up 7.6% over the same period in 2023).

Retail sales of goods in the first 9 months of 2024 are estimated at VND 3,630.2 trillion, up 7.9% over the same period last year (excluding the price factor, the increase was 5.4%). Retail sales of goods in the first 9 months of this year compared to the same period last year in some localities such as: Quang Ninh increased by 10.4%; Hai Phong increased by 9.3%; Can Tho increased by 7.7%; Da Nang increased by 7.4%; Ho Chi Minh City increased by 7.2%; Hanoi increased by 7%.

Ms. Dinh Thi Thuy Phuong - Director of the Department of Trade and Service Statistics, General Statistics Office, although the growth rate of retail trade of goods and consumer service revenue in the first 9 months of 2024 has not reached the same growth rate as the period before the Covid-19 pandemic and the increase is 2.5 percentage points lower than the average 9-month increase of the years (2015-2019).

However, in terms of the scale of retail trade of goods and consumer service revenue in the first 9 months of 2024, there was a fairly good growth rate compared to previous years. In particular, in 2024 compared to 2023, it increased by 379,108 trillion VND, compared to 2022, it increased by 775,323 trillion VND. Accordingly, the first 9 months of 2024 reflected a recovery in domestic consumer demand but not high.

Final consumption accounts for over 63% of GDP, reflecting the very important role of this driving force in economic growth. In the first 9 months of this year, final consumption of households and the Government increased by 6.18%, contributing 62.66% to the economic growth rate of 6.82%.

According to Mr. Nguyen Bich Lam - Former General Director of the General Statistics Office, despite the "consumption support" of 12.7 million international tourists to Vietnam, the total retail sales of goods and consumer service revenue at current prices is estimated at VND 4,703.4 trillion, up only 8.8%, 1.3 percentage points lower than the 10.1% increase in the same period last year. The total retail sales of goods and consumer service revenue at comparable prices increased by 5.8%, 1.8 percentage points lower than the 7.6% increase in the same period in 2023.

This reflects the difficulties of households as employment and income remain affected by the slow and weak recovery of the economy; the proportion of households facing financial difficulties remains high; consumer confidence has declined, people have tightened spending, saved more and delayed large-value purchases.

The cause of this situation is due to the severe consequences caused by the Covid-19 pandemic, the economy has not fully recovered as before the pandemic. The wave of migration of workers from industrial zones to their hometowns, accepting precarious jobs in the informal sector with lower incomes, but in return, workers can live peacefully in their hometowns, do not have to pay rent, have more time to take care of their families, their income is reduced but their life is relaxed and peaceful.

Stimulating consumption, what is the solution?

Final consumption by households and the Government is the largest, most influential, and most important driver of economic growth. Increased final consumption demand means solving difficulties in finding markets for businesses, creating jobs for workers, and reducing dependence on global aggregate demand.

Therefore, Mr. Nguyen Bich Lam recommended that the Government needs to implement solutions to stimulate consumption through tax and social security policies such as reducing personal income tax; VAT reduction with a longer term, a rate higher than 2%; reduce air and rail service prices to stimulate domestic tourism and attract foreign tourism; increase promotions with the goal of Vietnamese people giving priority to using Vietnamese goods.

Along with that, the Government needs to implement social security policies to subsidize the poor, support social housing for workers, create peace of mind about accommodation, encourage work spirit, to increase the labor rate of the formal sector, create stable jobs to meet the labor requirements of enterprises. In addition, increase taxable income, reduce VAT on essential consumer goods to increase spending needs.

Dr. Nguyen Duc Do - Deputy Director of the Institute of Economics and Finance (Ministry of Finance) - recommended that the State should consider supporting personal income tax through early adjustment of family deductions when they are outdated and no longer suitable. When actual income increases, people will spend more on shopping.

According to Mr. Dinh Tuan Minh - Research Director of the Center for Market Solutions for Socio-Economic Issues (MASSEI), the government should consider extending the 2% VAT reduction period instead of only applying it until the end of 2024. In fact, this policy has shown clear effectiveness in recent times. In addition, the government can adjust the family deduction level when amending the Personal Income Tax Law, consider reducing corporate income tax, etc. These support policies are very important to the country's socio-economic development during the recovery period.

To stimulate domestic consumer market, promote production and business activities, and contribute to economic recovery in the last months of the year, Ministry of Industry and Trade issued Decision No. 2245QD-BCT on organizing the "Program" Promotion National Concentrated Promotion Program 2024 - Vietnam Grand Sale 2024" and is expected to take place from December 2, 2024 to December 31, 2024 nationwide. Along with the National Concentrated Promotion Program, localities are also actively implementing stimulus solutions at the provincial and city levels.

Along with stimulus solutions, at the Meeting Government In the regular meeting of September 2024, Minister of Industry and Trade Nguyen Hong Dien also requested that all levels, sectors and localities need to focus on implementing well the policies and mechanisms to support businesses and producers and traders affected by storm No. 3 to soon recover and stabilize production and business for businesses, thereby creating jobs and livelihoods for people.

In addition, continue to promote the role of the Government to urge, supervise and remove obstacles and difficulties for ministries, branches and localities, promote the implementation of large projects, key projects, promote the disbursement of public investment capital to promote social investment, at the same time, contribute to stimulating consumption and promoting the development of the domestic market. At the same time, it is recommended to continue implementing consumer stimulus packages, especially at the end of the year, combined with proactively implementing market stabilization programs, focusing on essential goods and in areas affected by storms and floods.

Domestic consumption is one of the three pillars of economic growth. Along with promotional programs and policies, experts believe that consumer confidence is very important, ensuring the effectiveness of consumer stimulus solutions. Therefore, along with social security policies, stable job creation, policies on bank interest rates, real estate market, gold prices, stable foreign currency prices..., it will increase consumer confidence, promote spending, and solve the problem of relatively low domestic market demand in recent times.

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