On the morning of April 25, the National Assembly’s Economic Committee convened its 14th plenary session to give its opinions on the supplementary report on the economic and social situation in 2023 and the first months of 2024, which is expected to be submitted to the National Assembly at its 7th session, which opens on May 20.
Reporting at the session, Deputy Minister of Planning and Investment Do Thanh Trung said that since the beginning of this year, business and production activities have encountered various difficulties.
“Purchasing power is decreasing, people are tightening their spending,” said Mr. Trung, adding that the growth rate of domestic consumer demand in the first quarter was lower than the same period in 2023 and the pre-pandemic years from 2011 to 2019. Total retail sales of goods and consumer service revenue in the first quarter of 2024 increased by only 8.2% compared to the same period last year.
The Deputy Minister of Planning and Investment assessed that the current low market demand and high competitiveness are the biggest difficulties facing processing and manufacturing enterprises. In the first quarter of 2024, nearly 74,000 businesses withdrew from the market, an increase of 22.8% compared to the same period in 2023. The majority of these were small and medium-sized enterprises. On average, nearly 24,700 businesses withdrew from the market each month. Additionally, credit growth as of April 4 increased by only 0.95% compared to 2023.
Purchasing power decreased in the first quarter of 2024. Illustrative photo.
According to the Deputy Minister of Planning and Investment, the real estate market remains challenging, especially in terms of regulations and procedures for developing social housing projects. The aviation industry faces various difficulties, including a reduction in the number of commercial aircraft, leading to an increase in domestic airfares, which affects tourism development and people’s travel needs.
Dr. Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management (Ministry of Planning and Investment), stated that people “still have money but do not dare to spend it,” as reported by Thanh Nien.
Dr. Can Van Luc, Chief Economist of BIDV Bank, noted that not only in Vietnam but worldwide, people are being cautious about spending. He cited as an example the strong growth in the number of tourists, but tourism revenues have not increased correspondingly.
Nguoi Lao Dong reported that, according to information from several large supermarket chains in Ho Chi Minh City, market purchasing power has slowed down since the second half of March compared to before. While the product groups of vegetables, fruits, fish, meat, and essential goods still have positive growth, non-essential items such as confectionery and alcohol have decreased by double digits compared to the same period in 2023.
According to supermarket statistics, the value of customers’ shopping baskets is noticeably decreasing. Retail businesses are constantly holding meetings to analyze the situation and find solutions to boost purchasing power, but market signals have not yet improved.
People’s deposits in banks amounted to nearly 6.5 million billion VND as of January 2024. Illustrative photo.
People’s deposits reach 6.498 million billion VND
Recently, the State Bank of Vietnam also reported that the total deposits of individuals and businesses as of January 2024, compared to the end of 2023.
Specifically, deposits of individuals reached 6.498 million billion VND, a decrease of 0.53%. Meanwhile, deposits of organizations reached 6.676 million billion VND, a decrease of 2.41%.
Since September 2022, when deposit interest rates increased significantly, along with the economy facing various difficulties, both individuals and businesses have continuously deposited money in banks. The total deposits in each month were always higher than the previous month, even when deposit interest rates reached record lows.
Regarding interest rates, Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, said that the interest rate level is the lowest in the past 20 years. According to reports from commercial banks, as of March 31, the average deposit interest rate for new transactions was 3.02% per year, a decrease of 0.5% per year compared to the end of 2023.
The highest deposit interest rates of state-owned commercial banks Agribank, VietinBank, and BIDV currently listed on their websites are 4.7% per year for terms of 12 months or more. Vietcombank’s 12-month deposit rate is 4.6% per year.
For private joint-stock commercial banks, the long-term interest rate of 12 months is 0.1-0.2% higher than that of state-owned banks. At VPBank, the 12-month term is 4.8% per year.
