Many economic experts believe that interest rates will continue to decrease from now until the end of the year, lending rates in particular. A series of fiscal policies, such as VAT reductions and salary increases, are also expected to stimulate domestic consumption. Vietnam's largest retail consumer outfit, Masan Group, is set to benefit significantly from these policies.
In the first nine months of 2023, Masan recorded positive business results despite the challenging macro environment. Masan’s net revenue was VND57.5 trillion ($2.35 billion) in the first nine months of 2023, an increase of 3.5 per cent on-year.
Masan’s consumer businesses, WinCommerce (WCM), Masan Consumer Holdings (MCH), Masan MEATLife (MML), and Phuc Long Heritage (PLH), grew their combined earnings before interest and taxes (EBIT) by 45.5 per cent in the same period, and over 47 per cent in the third quarter compared to last year.
According to data by the General Statistics Office, total retail sales of consumer goods and services in October were estimated to be over VND536 trillion ($22 billion), up 1.5 per cent against the previous month and up 7 per cent on-year. This increase is attributed to rising consumer demand for cultural and educational items, household appliances, accommodation, food, and travel services.
According to records from the government's regular meeting on September 30, based on the results of the first three quarters of 2023, the Ministry of Planning and Investment has outlined three potential economic growth scenarios, with GDP growth forecast at 5 per cent, 5.5 per cent, or 6 per cent. The Prime Minister has requested to push for a full-year GDP growth scenario of about 6 per cent.
Although Vietnam is still dealing with the consequences of the pandemic, the government has successfully saved VND500 trillion ($20.57 billion). This money will be used to prepare salary reforms in 2024, 2025, and 2026.
According to information from the Ministry of Finance (MoF), the Government Office has issued an official dispatch on the proposal to reduce VAT in the first six months of 2024. Deputy prime minister Le Minh Khai agreed with the MoF's proposal to reduce VAT by 2 per cent.
As per the proposal from the MoF to the prime minister, VAT reduction will continue to be implemented from January 1 to June 30 next year. The 2 per cent reduction in VAT will continue to be applied to groups of goods and services currently applying the 10 per cent tax rate, reducing to 8 per cent.
Many experts believe that interest rates from now until the end of the year will continue to decrease, especially lending interest rates, which may decrease faster. Specifically, economist Ngo Tri Long has forecast that interest rates will decrease by about half a percentage point by year-end. Deposit interest rates will decrease more slowly than lending.
“Lending interest rates are still high. There is still ample room to decrease. Therefore, lending interest rates should decrease faster than deposit interest rates," Long said.
On November 1, the US Federal Reserve decided not to raise interest rates after a two-day policy meeting. The reference interest rate in the US is currently around 5.25-5.5 per cent – the highest in 22 years. There was no increase in September either.
This is a positive sign, creating conditions for the State Bank of Vietnam to operate a more flexible monetary policy. Domestic interest rates will be adjusted towards stability and a downward trend.
Vietnam should have wiggle room to apply monetary and fiscal policies in the near future to optimise GDP growth, indirectly pumping a large amount of money into the economy.
Salary reform policies will help stimulate domestic consumption and retail consumer businesses like Masan Group will benefit significantly. With support from the government's policies and a growing retail consumer base, Masan shows promise of a strong finish line to 2023.
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