Mon, 15th Apr 2024 12:56 (GMT +7)

Increasing purchasing power to restore production

Wednesday, 20/03/2024 | 15:30:00 [GMT +7] A  A

During the recent Lunar New Year (Tet) 2024, although the purchasing power increased as usual, it has been noted that the increase only occurred in the few days ahead of Tet, and the increase was much lower than during the same period last year as well as the years prior to the COVID-19 pandemic.

Consumers shop at Aeon Long Bien supermarket. (Photo: NGUYEN TRANG)

The 8.1% increase in the total retail sales of goods and revenue from consumer services in the first two months of this year does not fully reflect the ongoing pace of the national economic recovery.

The decrease in purchasing power shows that people have to tighten their spending even on typical items for Tet such as cakes, candy, flowers, and ornamental plants.

In addition to structural factors due to changes in customers’ tastes, habits, and needs, this situation also shows people's psychology regarding saving and spending amidst the difficult economic situation.

Along with businesses' efforts to stimulate demand, such as not increasing selling prices to maintain purchasing power and organising generous promotions to attract consumers, drastic solutions have also been adopted by the Government, ministries, and sectors.

They included reducing the value added tax (VAT) and interest rates, enhancing the campaign on encouraging Vietnamese people to prioritise using Vietnamese goods, organising trade promotion programmes and activities, boosting supply and demand connection, and fostering night-time economy.

These solutions aim to promote the domestic market, making it as a solid foundation to for the country’s economic development in the context that export activities are affected by external factors and public investment has not developed as strongly as expected.

According to economic experts, this is the time to have specific solutions to support domestic businesses and especially household businesses to maintain their economic activities in order to keep workers at their jobs and ensure their income.

Export processing enterprises, small and medium-sized enterprises, and household businesses operating in the service sector are those that create the majority of jobs.

When these businesses face difficulties so challenging that they are forced to close and lay off workers, it will immediately affect people's incomes, thereby affecting purchasing power in the market.

In 2023, there were periods of time when the number of newly established businesses was lower than the number of those having suspended operations or filed for bankruptcy.

This situation continued to occur in the first two months of this year, illustrating that production and business activities still face difficulties, and thus, workers' incomes are not abundant enough for their money spent.

To increase purchasing power, the most important solution is to restore production and business and create a favourable business environment to increase the numbers of enterprises being established and returning to operation while decreasing the number of businesses shutting down.

Therefore, after all, the economy is people's livelihood. Failure to maintain production and business activities will not ensure people's livelihoods nor incomes to promote domestic consumption as total consumer spending is currently estimated to account for more than 70% of the GDP structure.

Source: NDO