Economic Struggles of Ho Chi Minh City Amidst Soaring Inflation
Revised Output
HCM CITY - Tackling inflation has become a pressing economic concern for HCM City, as the city grapples with escalating prices and anticipated challenges in the second half of the year.
Here's a closer look at the current situation and the potential hurdles that the city might face.
Recent data from the city Statistics Department reveals a steep increase in the Consumer Price Index (CPI) for the first five months of the year, posing a challenge to residents' budgets. The CPI stood at 4.27%, with healthcare and medicine costs soaring by 17%, while overall CPI growth for the same period remained steady.
On the flip side, transportation costs experienced a slight dip during these months. However, this hasn't alleviated the inflationary pressure felt by residents. In fact, the city's inflation rate exceeds the national average and neighboring provinces (between 1.5% and 2%), hinting at an uphill battle lasting through 2022.
Moreover, the city is bracing for increased challenges due to US countervailing duties affecting local production. As shared by city officials, this development could pose additional challenges for HCM City in the second half of the year.
A brighter spot for the city is its ever-growing economic sectors, such as retail, tourism, and exports. The total retail sales and consumer service revenue in May reached VNĐ113.364 trillion, up 19% from April. For the first five months, the total revenue is projected at VNĐ544.447 trillion, reflecting a healthy growth year-on-year.
The city's tourism sector has also shown significant growth, with over VNĐ97.999 trillion in revenue in the first five months, up 28.9% year-on-year. This growth contributed to attracting over 3.123 million international visitors and domestic tourists numbering over 15 million.
The city's export turnover grew by 3.4% in May from the previous month, reaching $20.36 billion in the first five months, up 16.1% year-on-year. The industrial production index (IPI) also witnessed growth, rising by 5.1% in May and 9.4% year-on-year.
Despite the promising progress, challenges loom over HCM City, including underperforming public investment capital disbursement and increasing numbers of businesses dissolving or temporarily suspending operations. According to reports, VNĐ8.71 trillion had been disbursed as of May 28, signifying a disappointing 10.2% of the public investment target for the year.
Customers at a supermarket in HCM City. The city faces rising inflation challenges. - VNA/VNS Photo
New business registrations saw a decline with a 31.4% drop in quantity and a 54% decrease in capital, while registered and supplementary capital increases were observed at 5.9% year-on-year. Overall, HCM City has set a target this year to achieve at least 8% growth, with many factors contributing to its progress and obstacles to overcome.
While specific measures addressing inflation in the second half of the year remain undisclosed, rising inflation poses economic challenges for residents, and HCM City braces itself for the impact that global economic conditions, trade, and export issues, as well as affordability and employment concerns, may have on its economy.
- In light of the growing inflation, the city's healthcare sector may face increased financial strain, especially considering the significant rise in costs for healthcare and medicine.
- The escalating inflation rates might have a ripple effect on the city's business sector, with potential consequences for businesses, particularly those in finances, sports, and artificial intelligence, as they grapple with increasing costs and potential decreases in consumer spending.
- Amidst the challenges of inflation, the city's strengthening economic sectors, such as retail, tourism, and medicine, could potentially benefit from advancements in technology, such as AI, to streamline operations, increase efficiency, and maintain competitiveness.
