Retail sales reach the highest level over the four years

The statistics show that the growth rate of retail sales in the first 7 months of 2015 compared to the same period last year had several highlights as follows:

Excluding the increase of the average price index (up to 0.86%), the total retail sales in the first 7 months of this year rose nearly 9%, which is the highest increase compared to the same period in the last 4 years.

Total retail sales of goods and services revenue are the key component of final comsumption (accounted for 90%), where final consumption is the largest proportion (70%) of GDP. Therefore, the total retail sales are one of the driving forces of production and also a prerequisite to improve the consumers’ living standards.

07 highlights of the growth rate of retail sales in the first 7 months of 2015 as follows

Firstly, the growth rate increased again. Excluding the increase of the average price index (up to 0.86%), the total retail sales in the first 7 months of this year rose nearly 9%, the highest increase compared to the same period in the last 4 years.

Secondly, the increase in the retail sales in the first 7 months plus the impacts in the coming time are a positive signal for the whole year growth rate to exceed 9.5%, almost double the annual growth of period 2011-2014.

Thirdly, the coefficient between the retail sales growth rate and GDP growth rate increased over the years (from 0.74 in 2011, 0.82 in 2012 to 1.05 in 2013 and 2014, 2011-2014 average is 0.91 to 1.5 in the first 7 months of 2015).

Fourth, there has been a remarkable shift in economic sector. Total retail of private sector accounted for the largest proportion of total retail sales (85.6%) and increased significantly. The public sector accounted for 11.1% of total retail sales with the highest increase (14.1%).

Retail sales of FDI sector, though accounted for a small proportion of total retail sales (3.3%), has experienced a gradual increase in the coming time when FTAs come into force…  

 Fifth, there has been a shift in services sector. Goods retail sector (purely commercial) accounted for the largest proportion of total retail sales (75.9%). Accommodation service industry, outdoor dining saw a higher increase (11.7%), but still grew at a low speed (7.2%).

 Other services accounted for larger proportion (11.5%) with a high speed (9.8%) according to the increase in the income and purchasing power of middle class. This is the general trend of countries shifting from lower income to higher income.

Sixth, total retail sales increased due to an increase in total final consumption. Growth rate of final consumption in the first 6 months of 2015 grew up to 8.7%, contributing 7.74 percentage points to GDP growth - accounting for 77.5% of total contributions accrued and final consumption.

Last but not least, the increase in retail sales impacted positively on consumer lives, reducing the inventory, increasing consumption and production – business and economic growth.

Although total retail sales increased again but due to the growing scale in consumption, aggregate demand remained low. Weak aggregate demand is a negative factor for the production – sales. This may explains why in the first 6 months of this year, CPI increased slowly.

Therefore, in addition to promoting investment, increasing exports we should increase income to increase domestic consumption to boost aggregate demand, contributing to the goals of economic growth.

BBT