This article covers:
• Vietnam’s booming tourism impacting GDP growth
• Retail and tourism sectors boosting each other
• Service exports, including tourism, playing a significant role in Vietnam’s economy
• Retailtainment as an emerging trend in shopping tourism
Vietnam’s Export Landscape
Vietnam’s economy has long been celebrated for its robust export sector, traditionally dominated by goods exports. However, a new player is making significant inroads into the nation’s GDP - service exports, with tourism leading the charge. In the first half of 2024, Vietnam’s retail sales and consumer service revenues climbed by 8.6 percent year on year, amounting to over 3.09 quadrillion Vietnamese dong (approximately 121.39 billion U.S. dollars). This growth is largely attributable to the burgeoning tourism sector and an increase in foodstuff sales, according to the country’s General Statistics Office.
The interplay between tourism and retail sales in Vietnam is becoming increasingly symbiotic, contributing not just to GDP growth directly but also bolstering the economy indirectly. Michael Kokalari, a chartered financial analyst and chief economist at VinaCapital, noted that the surge in tourist arrivals is expected to continue, potentially adding more than 1 percentage point to Vietnam’s GDP growth this year. He estimates that purchases by foreign tourists account for about 10% of retail sales in the country, spreading economic benefits across a wide array of local businesses.
The Interconnection of Tourism and Retail
The synergy between retail and hospitality sectors is revitalizing both industries through the phenomenon known as shopping tourism. This trend, which marries cultural landmarks with diverse shopping experiences, not only enriches the tourist’s journey but also injects vitality into the local retail market. An emerging facet of this trend is "retailtainment," which transforms traditional shopping ventures by incorporating interactive and entertaining elements, thereby attracting a larger number of tourists and encouraging them to spend more.
Shopping tourism has become an integral economic sector with the power to significantly influence the retail and hospitality industries alike. The recovery and growth of tourist arrivals in Vietnam are testament to the increasing importance of service exports, especially tourism, in the country’s economy. Of Vietnam’s total exports, goods still dominate, accounting for 82 percent of GDP. However, service exports, notably tourism and transport, have carved out a significant niche, representing 12 percent of GDP.
Domestic exports continue to flourish, with the export turnover in the first half of the year estimated at $188.97 billion, marking a 13.8 percent increase year on year. This growth underscores the importance of not only goods exports but also the rising significance of service exports to the Vietnamese economy. The Department of Planning and Finance highlights that retail sales of goods and services, along with investment, are crucial components of economic growth, further emphasizing the interconnectedness of tourism, retail, and broader economic prosperity.
The dynamic interplay between tourism and retail in Vietnam is a compelling example of how emerging markets are diversifying their economies and leveraging the growth of service sectors to enhance GDP growth. As Vietnam continues to welcome tourists from around the globe, the retail sector is poised to benefit, driven by the demand from foreign visitors and the innovative concept of retailtainment. This development signals a promising future for the Vietnamese economy, where service exports and the retail sector play increasingly pivotal roles.
In conclusion, the significant impact of tourism on Vietnam’s GDP and retail sector underscores the potential for other emerging economies to leverage their tourism industries for broader economic benefits. As Vietnam navigates the interconnection between tourism growth and retail sales, the continued expansion of service exports, including tourism, is likely to play a critical role in shaping the country’s economic landscape in the years to come. With the rise of shopping tourism and retailtainment, Vietnam is setting a benchmark for how to integrate cultural, recreational, and shopping experiences to boost both tourism and retail sectors simultaneously.
