Vietnam's domestic consumption continues to show resilience amid economic slowdown

From January-May 2023, Vietnam posted retail sales of goods up 10.7 per cent to about 1,994 trillion dong (US$84 billion), with sales of food growing 14.6 per cent. - VNA/VNS

HANOI (Xinhua): Vietnam's retail sales of goods and services rose 12.6 per cent from a year earlier to over 2,52 trillion Vietnamese dong (US$107 billion) in the first five months, Vietnam News Agency reported on Tuesday (May 30).

Total sales by retailers and service providers in the January-May period grew at the fastest pace since 2015, rebounding from the year-on-year expansion of 10.9 per cent in pre-pandemic 2019, said the General Statistics Office (GSO) in a statement.

Specifically, Vietnam posted retail sales of goods in the period up 10.7 per cent to about 1,994 trillion dong $84 billion), with sales of food growing 14.6 per cent, garments and clothing expanding 11.1 per cent, and means of transport, excluding cars, up 4.2 per cent, according to the GSO.

Restaurant and accommodation revenues from January to May totalled 268.3 trillion dong ($11.3 billion), up 22.1 per cent, while tourism revenues climbed 89.4 per cent from a year ago to 11.6 trillion dong (nearly $489 million), the statistics data showed.

Domestic spending is improving but has yet to fully grow to the size of a market of nearly 100 million people, said Nguyen Thuy Hien, deputy head of the Planning Department under the Ministry of Industry and Trade.

"That's why the Ministry of Industry and Trade, along with relevant ministries and authorities, has asked the prime minister to extend a cut to value-added tax (VAT) on goods and services to spur domestic consumption," she said.

The call for another round of VAT cuts to 8 per cent from 10 per cent came just four months after the ending of the previous one. Last year, the government lowered the VAT in response to the negative impacts of the Covid-19 pandemic.

The tax cut proposed by the Ministry of Finance has been approved by the government and it would need the parliament's approval during the ongoing meeting session ending on June 24.

The tax cut, scheduled to be effective for six months starting from June, would translate into 35 trillion dong ($1.48 billion) in lost tax revenues, the government said.

Vietnam's economy in the first quarter expanded 3.32 per cent year on year thanks mainly to an increase of 6.79 per cent in the services sector as the export-driven economy has been hit hard by slowing global demand.