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High retail, higher deficit
The nation's total retail sales and service revenues in the first quarter of the year have been estimated at a rather high VND451.8 trillion (US$21.5 billion).
Experts say such figures are evidence of improved living standards and the emergence of a middle class ready to spend big.
Another positive sign is that the high growth in retail sales would boost economic growth, but there is a negative side as well.
The fact that the retail growth is higher than that of local production means the extra consumption is fed by imports, hence a higher trade deficit.
In the last three months, the country's retail sales and service revenues rose 8.7 per cent over the same period last year. The retail sales growth rate was 1.6 per cent higher than the GDP growth during the same period.
The gap between retail and GDP growth is an ominous sign, experts say.
In 2010 for instance, the GDP met only 90 per cent, or less, of the country's capital needs for investment and consumption activities. Meanwhile, the ratio of savings to GDP was 28.5 per cent, much lower than the 41.9 per cent ratio of investment capital to the GDP.
The country's trade deficit in the first quarter increased continuously, from $0.88 billion in Jan to $1.11 billion in February and to $1.15 billion in March.
With world inflation as high as it is at present, rising domestic trade deficit also poses the threat of "inflation import," aggravating the situation at home.
Thien Ly
vietnamnews
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