Domestic consumption has rebounded positively, contributing to the 7.09% economic growth recorded last year. However, consumers continue to adopt a cautious approach to spending amid ongoing socio-economic challenges.
Domestic consumption has rebounded positively, contributing to the 7.09% economic growth recorded last year. However, consumers continue to adopt a cautious approach to spending amid ongoing socio-economic challenges.
Determined to restore the economy to a high growth trajectory, the government issued Resolution No. 01/NQ-CP in 2024, focusing on expanding the domestic market and aiming to achieve a 9% increase in total retail sales of goods and consumer service revenues. This target was successfully met, with the year’s total reaching over 6.39 quadrillion VND (251.87 billion USD), up 9% year-on-year.
According to Dinh Thuy Phuong, Director of the Trade and Service Statistics Department under the General Statistics Office (GSO), these results were driven by the government's decisive measures. Key actions included stimulating consumer demand included addressing bottlenecks facing sectors such as manufacturing, retail, hospitality, tourism, transport, and warehousing.
The government’s policy of reducing VAT from 10% to 8% on essential goods and increasing the base salary since July 1, 2024, also played a pivotal role. These measures lowered production costs, boosted profitability, and encouraged consumer spending. Notably, the 20.6% increase in consumer goods imports last year reflected a robust recovery in domestic demand.
Tourism growth further fueled consumer demand. Vietnam welcomed more than 17.5 million foreign visitors in 2024, a 39.5% increase from 2023.
Despite these gains, Phuong cautioned that while consumption has recovered positively and met its targets, it has yet to return to pre-pandemic double-digit growth rates.
A shift in consumption patterns is also evident. In 2024, essential goods, such as food, clothing, household items, and educational supplies, accounted for 77% of total retail sales and service revenues, up from 75.3% in 2019 – the year before the COVID-19 pandemic. Meanwhile, spending on non-essential services, including tourism, dining, and entertainment, decreased, indicating consumer belt-tightening to focus on necessities.
Economic experts agreed that in the short term, domestic consumption remains a critical driver of economic growth. Former GSO General Director Nguyen Bich Lam said at a recent seminar that final consumption accounts for approximately two-thirds of the nation’s GDP, hence its place as an important driving force behind growth.
E-commerce, in particular, has emerged as a dynamic growth sector, with the local market surpassing 25 billion USD in 2024, growing 20% from 2023 and accounting for 9% of total retail sales.
Nguyen Anh Duc, Chairman of the Association of Vietnam Retailers, said maintaining a 20% annual growth rate in e-commerce over the next five years is vital to achieving the ambitious goal of double-digit GDP growth./.
VNA
