Vietnam's Garment Exports Struggle Amidst Inflation and Recession
Since beginning of this year, exports have decreased as consumption demand in Vietnam main export destinations has been negatively impacted by rising inflation and the economic downturn. But in recent months, the declines lessened in pace.
Experts advised the sector to speed the green transformation in order to take advantage of the global sustainability trend, noting that there are encouraging signs for the recovery of garment exports in 2024, but cautions about persistent global uncertainties should not be disregarded.
According to figures provided by the General Department of Customs, during the first ten months of this year, textile exports decreased by 10.8% to $3.65 billion and apparel exports by 12.9% to US$27.7 billion.
On the other hand, clothing exports decreased by just 0.1% in October while textile exports increased by 4% from September to $389 million.
According to Duong Thuy Linh, deputy general secretary of the Vietnam Cotton and Spinning Association (VCOSA), the challenge was not specific to Vietnam garment and textile industry but rather widespread for global export due to a decline in global aggregate demand brought on by geopolitical tensions, the global economic recession, rising inflation in major markets like the US and the EU, and tighter monetary policies forcing consumers to cut spending.
In the meantime, fewer and smaller orders were coming in due to the markets growing demands for sustainability standards and increased competition from other suppliers like Bangladesh and Myanmar.
Linh said that many textile companies were forced to narrow the production scale to 50-80 per cent from the end of last year to the second quarter of this year. However, slight recovery started from July with most producers resuming their full capacity.
The worst moment is passing by, Linh stressed, however, adding that the macroeconomy remains stable with GDP growth projected at 5 per cent, inflation is under control at 3.2 – 3.6 per cent and lending rates are being reduced to support enterprises.
The competitive advantage in labor cost was still possessed by the Vietnamese garment sector, she pointed out. Vietnamese free trade agreements (FTAs) with important markets are examples of newer agreements that have also helped the sector.
According to Ph?m Van Viet, head of the Viet Thang Jean Company, market demand is improving. Orders are gradually recovering to about 80% for the last quarter of this year, even though the purchasing power has not returned to the previous level, Viet stated.