Vietnam's garment industry struggles as global demand wanes-Xinhua

Vietnam's garment industry struggles as global demand wanes

Source: Xinhua

Editor: huaxia

2023-06-20 21:51:15

HANOI, June 20 (Xinhua) -- Vietnam's apparel export earnings dropped 17.8 percent to 12.3 billion U.S. dollars in the first five months of the year over slowing global demand, showed the latest statistics of the General Statistics Office.

Textiles and garments, Vietnam's second-largest export earner after smartphones and electronics, earned 44 billion dollars in 2022, helping the country's economy grow at the fastest annual pace since 1997.

But the industry has struggled so far this year as consumers in Europe and other big markets cut spending on clothing, Vietnam News Agency reported on Tuesday.

Vietnam is one of the world's largest textile and garment exporters. However, Vietnamese manufacturers are faced with a sharp decline in orders as the global textile market is forecast to shrink 8 percent this year to about 700 billion dollars, lower than the demand in 2020 at the onset of COVID-19 pandemic, according to a report by the country's largest textile and garment maker Vinatex.

Cao Huu Hieu, chief executive of Vinatex, said the slowdown in orders, on top of the fact that the manufacturer had to halve pricing for finished products without compromising on quality, has hit its profit margins.

Meanwhile, the weakening of the dong currency has made imports of raw materials more expensive, making it more difficult for garment exporters to honor their orders which are typically booked months before, said the Vinatex chief executive.

Rising interest rates in the first few months of the year also added to the difficulties faced by local manufacturers, he added.

Besides, Vietnam has lost the advantage of low labor costs as the average monthly wage for garment workers is currently around 300 dollars, higher than the global average of 200 dollars, according to Trading Economics.

The hit to the textile and garment industry is more severe because ongoing power shortages in northern Vietnam have curtailed production, said local manufacturers.

Textile and garment businesses are looking to the second half of the year with the hope that easing inflation pressure in major export markets like the United States and Europe, combined with benefits from new-generation free trade agreements, could lead to return growth of the demand side.

The country's textile and apparel association forecast exports to reach around 45 billion dollars this year.