Despite the gloomy gloomy outlook of the global economic, Vietnamese exporters of yarn, garment, textile, and leather shoes are still seeing a brighter future as robust signs are looming on the horizon.

Robust signs

According to statistics from the General Department of Vietnam Customs, Vietnam gained nearly 3.65 billion USD from shipping yarn abroad during January – October, up 12% in volume but down 10.8% in value year-on-year.

Meanwhile, the export of garment and textiles, footwear, handbags, wallets, suitcases, umbrellas, and materials for garment and textiles and leather shoes production brought home 27.7 billion USD, 16.4 billion USD, 3.06 billion USD, and 1.6 billion USD, falling 12.9%, 18.3%, 10% and 14.4% as compared to the same time last year.

However, the figures in October improved from the previous month, with growth recorded in both volume and value, and economists described this as a positive sign for enterprises in the fields.

Duong Thuy Linh, Vice Secretary General and Head of External Relations at Vietnam Cotton and Spinning Association (VCOSA), blamed the sector’s difficulties to the fall in the global demand which came as a result of geopolitical tension and prolonged inflation in key export markets such as the US and the EU.

She pointed out stringent sustainability standards and shortened delivery time as other challenges, highlighting that fiercer competition from rivals Bangladesh and Myanmar has taken part of the orders Vietnamese firms receive.

However, the market has shown signs of recovery since July as China opened its door after a long time applying its Zero COVID strategy, while Vietnam’s key export markets posted positive GDP growth, including China (5%), the EU (0.6%), the Republic of Korea (1.4%), and the US (2%).

Additionally, inventories of renowned brands like Nike and H&M have fallen significantly, she said, adding most of yarn-producing factories are now able to operate at full capacity.

Expectation for recovery

Linh forecast that Vietnam’s garment and textile industry will continue facing formidable challenges until 2024 due a decline in the number of orders from the US and the EU.

The country may ship around 40 billion USD worth of apparel to foreign countries, down 10% from the previous year.

However, the situation has bottomed out and garment and textile export will recover soon thanks to the resolve from the Government and businesses as well as stronger demand during the year-end holidays, according to VCOSA.

The consumer price index (CPI) for the whole year is estimated to grow 3.2-3.6%, helping stabilise inflation rate, while lending interest rates are falling which contributes to easing pressure on businesses, Linh said.

Furthermore, export activities will be backed up by an increase in the USD/VND exchange rate.

With its cheap labour cost, tax incentives and engagement in many free trade agreements, Vietnam has been ẹnoying competitive edge over its rivals.

Despite challenges in meeting global sustainability standards, many yarn factories have satisfied such international standards as Global Recycle Standard, Oeko-Tex, and BCI. Many of them have used organic cotton yarn and recycled yarn, and install rooftop solar panels.

The VCOSA suggested enterprises to make rational plans for both domestic and foreign markets, expand markets to countries with stable political situation, and capitalise on all opportunities to make a good recovery.

Meanwhile, economist Huynh Thanh Dien said the International Monetary Fund and the World Bank have forecast a better economic growth for Vietnam’s key export markets. However, businesses must stay abreast of new market behaviours and trends to survive and thrive.

VNA