Vinatex worries that low demand for garments will continue

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Mr. Vuong Duc Anh - Chief of Office of the Board of Directors of Vietnam National Textile and Garment Group (Vinatex) said that Vietnam's textile and garment export turnover in July 2023 reached 3.81 billion USD, down 9.4% over the same period, up 6.2% over June 2023. In the first 7 months of 2023, textile and garment exports reached 22.5 billion USD, down 15.9% over the same period in 2022.

Forecasting the market, Mr. Vuong Duc Anh commented that for the garment industry market, the low demand situation in 2023 may last into 2024. The market in the last months of 2023 has no momentum to increase, total demand may only increase according to the natural annual increase with the year-end holiday seasons. For the US market, US apparel imports in the last 6 months of the year are expected to increase by 10% compared to the first 6 months of the year, bringing the total apparel import turnover of this market to 80 billion USD in 2023 (down 20% compared to 2022). For the Japanese market, the growth momentum of the first 6 months of the year may continue, but may be affected by a 5-7% depreciation compared to the continued depreciation of the Yen according to JP Morgan's forecast.

For the cotton - fiber - yarn market, cotton prices in the last 6 months of 2023 will increase slightly, fluctuating in the average range of 82 - 88 cents/lb, equivalent to 2.1 - 2.3 USD/kg. For polyester fiber, it may fluctuate slightly according to oil prices, fluctuating from 1 - 1.05 USD/kg with oil prices forecast to fluctuate around 80-90 USD/barrel. For the yarn market in the third quarter, which remains low, equivalent to the second quarter, in the fourth quarter, demand and yarn prices will improve slightly based on input cotton and fiber prices, so yarn businesses may reduce losses when the high cotton prices are used up, while yarn prices will remain almost unchanged.

Analyzing some forecasts on exchange rates in the last 5 months of 2023, Chairman of the Board of Directors of Vinatex Le Tien Truong said: The depreciation rate of VND compared to other countries' domestic currencies is very low, in which VND depreciates at 1.48%, while the Chinese Yuan (China) is 7.15%, Yen (Japan) is 8.29%, New Taiwan Dollar (Taiwan, China) is 5.59%... Therefore, the pressure to depreciate VND is very large when loosening monetary policy. The increase in USD and interest rates higher than VND will pose a big risk of attracting capital out of Vietnam.

In addition, it is not yet the season for importing goods for Christmas production or importing consumer goods for Tet, so the demand for foreign currency will increase in the coming time. With the above forecasts, it is likely that from now until the end of the year, VND will depreciate by another 2% by the end of 2023. Therefore, businesses need to consider some flexible management solutions to avoid fluctuations in exchange rates that negatively impact production and business results for the whole year.

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