Rising private consumption to be major contributor to GDP growth
China and other countries are looking to consumers and shifting to the production of the goods which bring higher added value. What is the trend in Vietnam?
A report by the State Bank of Vietnam (SBV) shows that 35%-40% of the credit has been poured into real estate, securities and consumer sectors in the first half of the year. These are also sectors which have seen the highest credit growth rate compared with the same period (27.5%) last year.
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Official reports show that Vietnam has been importing more food from the Republic of Korea, Japan and Thailand. This is partly because Vietnamese goods still cannot satisfy consumers and remain uncompetitive in both the Vietnamese and the world markets.
“Vietnam will only obtain sustainable consumption growth if it can improve competitiveness, and upgrade institutional quality and labor productivity,” Thanh said.
According to Luong Quang Thi, CEO of ABA Corp, to improve productivity, Vietnam needs to gather its strength on the works it is best at, while there is no need to undertake all works.
Jonathan Dunn, Chief Representative of IMF in Vietnam, said that a low productivity economy would hinder economic development through consumption.
Improving productivity requires time and a series of comprehensive development measures.
Therefore, according to Jonathan Dunn, there is another way to stimulate demand – stabilizing the macroeconomy.
In addition, the state should create the most favorable conditions and prioritize to allocate capital to product research and development, thus encouraging consumption and private spending.
According to HSBC, the consumer trends in the coming years will focus on the middle class, especially in emerging markets.
