Vietnam’s retail sales demonstrated a year-on-year growth of 9.3 percent in December 2023, marking the 25th consecutive month of expansion, as revealed in a recent report by BMI, a unit of Fitch Solutions.

The December 2023 growth rate significantly decreased from the 20 percent recorded at the beginning of the year, primarily attributed to the lingering impacts of the COVID-19 pandemic.

The report anticipates stable retail sales growth in 2024, supported by a broader economic outlook.

Regarding the consumer spending outlook, BMI predicts robust expansion in Vietnam’s household spending for 2024, with a projected 7.1 percent year-on-year growth, surpassing the pre-pandemic 2019 figures.

This forecast signals a return to pre-COVID-19 growth levels, as household spending exhibited an average real growth rate of 6.6 percent from 2015 to 2019.

The report highlights that easing inflation and a steady labor market will bolster spending, maintaining purchasing power throughout the year. However, it notes weaknesses in the local real estate and financial sectors.

The report predicts a depreciation of the Vietnamese dong against the U.S. dollar, projecting a shift from VND23,800/USD in 2023 to VND24,350/USD in 2024.

Vietnam’s heavy reliance on imports to meet local demand may face challenges due to the depreciating currency, leading to increased costs for imported goods.

Inflation in Vietnam has been on an upward trajectory, driven by heightened domestic economic activity and rising imports. The report highlights that despite a 3.6 percent year-on-year inflation rate in December 2023, it is lower than the average 4.5 percent expected for 2024, suggesting persistent price inflation throughout the year, as stated by BMI.