Bright and dark colors in the textile export market picture

According to analysis from the Vietnam Textile and Garment Group, consumption demand in Vietnam's major export markets such as the US, EU, and Japan in the first 6 months of the year has not recovered evenly. Although inflation has dropped sharply from its peak of 9-10% in 2022 to around 3%, interest rates remain high, so consumers are still tightening their spending.

Specifically, in the US market, the cumulative import demand for textiles and garments up to May 2024 reached 40.8 billion USD, down 3.7% over the same period. In 2024, US textile and garment imports are estimated to reach 100.5 billion USD, of which textile yarn is estimated to reach 25.1 billion USD, and garments reach 75.3 billion USD.

In the EU, due to potential geopolitical factors, the region's economic growth in 2024 is forecast to be modest at 0.9% in 2024. EU textile and garment imports, accumulated in the first 4 months of 2024, reached 39.3 billion USD, down 7% over the same period, equivalent to 2019.

Bright and dark colors in the textile export market picture.

On June 10, Japan announced that its GDP in the first quarter of 2024 was revised down by 1.8% year-on-year, up 0.2% from the initial estimate. Japan's inflation in May 2024 was 2.8%, the highest in the past 3 months (April 2024 was 2.5%). Retail sales in May 2024 increased by 3% year-on-year, but textile retail sales decreased by 0.3% year-on-year.

In the context of uneven economic recovery of textile and garment import markets, Vietnam's exports to these markets have also fluctuated.

Accordingly, in June 2024, Vietnam's textile and garment export turnover reached 3.7 billion USD, up 3.5% over the same period last year, and in the first 6 months of 2024, it reached 19.6 billion USD, up 4.6%.

In June 2024, Vietnam exported textiles and garments to the US reaching 1.53 billion USD, up 2.2% over the same period; Japan reached 339 million USD, down 2.4% over the same period; EU reached 435 million USD, up 10.5% over the same period; China reached 300 million USD, down 8.6% over the same period; South Korea reached 231 million USD, down 0.1% over the same period.

In the first 6 months of 2024, Vietnam's textile and garment exports to the US reached 7.39 billion USD, up 3.1% over the same period, equivalent to 220 million USD; Japan reached 1.97 billion USD, up 4.9%; South Korea reached 1.65 billion USD, up 2.6%; China 1.68 billion USD, up 4.6%; the EU market reached 2.02 billion USD, up 0.8%.

According to the leader of the Vietnam Textile and Garment Group, in addition to consumer demand, in the second half of 2024, there are many factors affecting Vietnam's textile and garment exports to markets.

First is the exchange rate competition between countries. In May 2024, Bangladesh was the country that devalued its currency the most among textile exporting countries. This was due to the Bangladesh Bank setting a new exchange rate on May 6, 2024, causing the Bangladeshi currency to depreciate by 6.52% against the USD.

After 2 months (April and May) of continuous decline in Bangladesh's textile and garment export turnover, Bangladesh has made new moves on exchange rates to maintain export turnover growth.

Meanwhile, the Vietnamese Dong only depreciated by 0.43% against the USD in May 2024. It is expected that the Vietnamese Dong will be more stable than before. However, it is possible that some countries such as Mexico, Bangladesh, Türkiye, and Indonesia will continue to devalue their currencies to support exports. This will make Vietnam less competitive than textile exporting countries due to the exchange rate.

Domestic interest rates, as of early July 2024, 23 commercial banks increased deposit interest rates, with the common increase fluctuating between 0.3% - 0.8% / year for a 12-month term. Increasing deposit interest rates also increases the risk of banks increasing lending interest rates, making it difficult for businesses to access capital, reducing the financial health of businesses.

In addition, freight rates have continued to climb recently, creating double pressure on businesses. The latest composite index of Drewry WCI on July 4 was at $5.868/40ft container, a new peak in 2024 (the previous peak on January 25, 2024 was $3.964/40ft container).

Major shipping routes from Shanghai to other countries have seen increases of 10-30% recently. Congestion in Asia is expected to continue to push up freight rates further.

In particular, from July 1, in the business sector, workers will receive an increase in regional minimum wages and an increase in hourly minimum wages of 6%. For the labor-intensive textile and garment industry, the wage increase will increase financial costs.

Faced with the above challenges, experts recommend that domestic enterprises closely follow market fluctuations; select suitable orders; improve production and management capacity to reduce input costs.

Source: https://congthuong.vn/mang-mau-sang-va-toi-trong-buc-tranh-thi-truong-xuat-khau-det-may-332563.html