Consumption: The driving force for economic growth

Stimulating consumption promotes economic growth

At the opening session of the 9th extraordinary session of the National Assembly last February, Minister of Planning and Investment Nguyen Chi Dung, authorized by the Prime Minister, presented the proposal for the 2025 socio-economic development supplementary project.

Leading consumer goods companies like Masan Consumer will reap positive results as the economy picks up, consumers become more confident about their income prospects and are willing to spend more on daily needs.

Accordingly, the Government proposed to adjust this year's GDP target from 8% or more. This level is about 1-1.5% higher than the plan the National Assembly resolved at the session at the end of last year and 1 percentage point higher than the implementation in 2024 (7.09%).

GDP scale in 2025 will reach over 500 billion USD and GDP per capita will be over 5,000 USD if economic growth this year is over 8% as proposed by the Government.

With a GDP scenario of over 8% this year, economic sectors will grow about 0.7-1.3% higher than in 2024. Of which, total retail sales of goods and consumer service revenue (at current prices) this year will increase by 12% or more.

This double-digit growth in total retail sales of goods also reveals a bright picture of the consumer market as our country achieves its set growth target.

Accordingly, leading consumer goods enterprises such as Masan Consumer will reap positive results when the economy breaks out, consumers are more confident about their income prospects and are willing to spend more on daily needs.

From a citizen perspective, everyone can contribute to the country's growth goals, especially in terms of consumption. Accordingly, when consumers spend more, the revenue of consumer and retail companies will increase, helping these businesses have more financial resources to invest in expanding their scale, researching and developing new products.

In addition, to meet consumer demand, businesses must expand production, invest more in infrastructure and technology, thereby creating job opportunities and increasing income. As businesses grow, they will need to hire more workers, which also contributes to economic growth.

Total social consumption, including the majority of personal and household spending and a smaller proportion from the Government, accounts for over 60% of GDP. Stimulating consumption will contribute significantly to realizing the growth target of over 8% in 2025, laying the foundation for double-digit growth in the coming years of our country's economy.

Accordingly, to stimulate consumption, the Ministry of Finance is seeking comments on the draft Resolution of the National Assembly on reducing value-added tax (VAT). Specifically, according to the draft, the value-added tax rate will be reduced by 2%, applied to groups of goods and services currently subject to a tax rate of 10% (to 8%). The period of application of the 2% value-added tax reduction prescribed above is from July 1, 2025 to December 31, 2026.

Reducing VAT can stimulate not only direct consumption but also the service, retail, and manufacturing sectors. Increased business revenue will create more job opportunities and increase production, creating momentum for economic development. As a leading consumer industry enterprise, Masan Consumer's business results outlook is promising this year. This enterprise also recently announced its 2025 plan with many positive prospects.

Masan Consumer wants double-digit growth in 2025

With a leading position in the consumer goods industry, Masan Consumer currently owns 5 “power brands”, each with annual revenue of over 100 million USD and large “coverage”. These are brands that have become familiar to millions of Vietnamese consumers such as CHIN-SU, Nam Ngu, Omachi, Kokomi and Wake-Up 247, accounting for 80% of Masan Consumer’s revenue in the domestic market over the past 7 years.

In addition, with close relationships with 313,000 traditional retail partners and 6,700 modern retail outlets, Masan Consumer has penetrated almost every corner of the Vietnamese market, serving 98% of Vietnamese households.

The year 2024 ended with outstanding successes for Masan Consumer, a member company of Masan Group. The company recorded net revenue of VND 30,897 billion, up 9.4% over the previous year.

Gross profit margin improved sharply, reaching 46.6%, thanks to the premiumization of product structure and portfolio optimization to bring higher added value. Notably, revenue from international markets grew by 30.8%, showing the clear effectiveness of the Go Global strategy, bringing Vietnamese brands to the international level.

Masan Consumer has penetrated almost every corner of the Vietnamese market, serving 98% of Vietnamese households.

According to JP Morgan, Vietnam represents the most exciting and remarkable consumer growth story in the Asia region. With a population of nearly 100 million, half of whom are under 32 years old, Vietnam has achieved GDP per capita growth of 7.1% CAGR (compound annual growth rate) since 2017, reaching over US$4,000 by 2022 - the highest among ASEAN countries.

Accordingly, with a rapidly growing economy, an expanding middle class, and an urbanization rate comparable to China and India in 2010, JPMorgan believes that Vietnam is entering a phase of modern trade growth, creating opportunities for consumer goods companies to increase their valuations in the future.

Along with that, the Government's GDP growth target of 8% or more in 2025, corresponding to a GDP per capita of more than 5,000 USD, will be a strong catalyst for the consumer market to recover this year, leading to positive business results for consumer companies such as Masan Consumer.

In 2025, Masan Consumer aims to maintain double-digit revenue growth, with a plan to reach VND33,500 to VND35,500 billion, while ensuring high profit margins.

According to nhandan.vn

Source: https://baoninhthuan.com.vn/news/152441p1c25/tieu-dung-luc-day-cho-tang-truong-kinh-te.htm