In its May edition of ‘Vietnam Macro Monitoring’ report, the financial institution said consumer demand remains weak in the country despite a sequential improvement in retail sales in May.

Retail sales increased by 1.2 per cent in May from a contraction of 0.3 per cent in April, driven by an improvement in goods sales, and rose by 3.3 per cent compared to the 8.1 per cent seen during the same month last year.

Both exports and imports surged in May. Exports of goods increased by 6.5 per cent after a contraction in April. Imports grew by 9.5 per cent in May compared to a 0.6 per cent drop in April.

Exports and imports grew at 15.8 per cent and 29.9 per cent YoY respectively in May this year, partly due to low base effects from 2023.

The significant growth in the import of intermediate inputs suggests increased demand from trade partners thereby leading to strong exports in the near future, the World Bank noted.

Foreign direct investment (FDI), meanwhile, continued to be solid. Cumulative FDI disbursement improved, registering $8.3 billion, 7.8 per cent higher than the same period from 2023, with the majority of FDI continued to flow into manufacturing and real estate sectors.

While headline inflation remained unchanged, core inflation moderated slightly. The consumer price index-based (CPI) inflation remained at 4.4 per cent in May compared to April.

Economists say while external demand has been recovering, the performance of domestic demand, especially consumption, remains weak.

However, given the strong US dollar, the reduction of interest rates to support investment could intensify pressures on the exchange rate, they added.

Fibre2Fashion News Desk (DS)