The textile and garment industry faces a mix of challenges and opportunities.

According to Mirae Asset, although Vietnam's textile and garment industry experienced significant growth in 2024, new challenges are emerging, primarily from macroeconomic uncertainties.

Growth in both major segments

A recent industry report by Mirae Asset indicates that Vietnam's textile and garment industry recorded positive export growth in 2024, with export values ​​increasing in both yarn and finished textile products. However, growth rates were uneven between the two segments, with finished textile products maintaining high growth momentum, while yarn growth remained modest. In 2024, exports of yarn and finished textile products are estimated to reach US$4.4 billion (up 1.2% year-on-year) and US$37 billion (up 11.2% year-on-year), respectively.

By the end of 2024, Vietnam's market share of apparel in key markets continued to expand, including the United States (18.9%; 2023: 18.2%), Japan (17.9%; 2023: 16.9%), and South Korea (29.2%; 2023: 28.7%). Notably, although market share in South Korea decreased slightly for most of the year, it recorded growth towards the end of 2024. Furthermore, Vietnam's market share of apparel in the United States and Japan continued its expansion trend throughout the year. Meanwhile, competitors such as China and Bangladesh generally saw a decline in market share.

As of the end of 2024, China remained the largest market for Vietnamese yarn, accounting for 47.7% of total export turnover. Textile and garment production volume in China continued its upward trend, and garment production volume also saw renewed growth.

Domestic textile and garment production continued to improve in 2024, especially in the fourth quarter of 2024. In 2024, the Industrial Production Index (IIP) of the textile and garment sector increased by 11.7% and 12.1% respectively compared to 2023. In addition, the employment index of workers in the textile and garment sector also continued to grow.

By the end of 2024 and the beginning of 2025, cotton prices remained low, around US$68 per pound, the lowest level since October 2020. This could signal a decrease in demand for inputs in the textile value chain.

Prospects and risks in 2025

According to the latest World Bank forecast, real GDP growth is projected for 2025 in Vietnam's key markets, including the US (+2.3%); the EU (+1%); Japan (+1.2%); and China (+4.5%). Economic growth will sustain demand for textile products in these markets.

A key development to note is the US trade war. Immediately after the US President took office, the US government announced several new tariff measures against Canada, Mexico, and China, as well as plans to apply new "reciprocal tariffs" to many other countries. However, because the Trump administration has kept the door open for negotiations and there is still time before the new tariffs are implemented (within 180 days for calculation and planning), Mirae Asset believes there is still an opportunity for Vietnamese textile products to avoid high tariffs.

Furthermore, there are conflicting monetary policy developments in key markets. In 2024 and early 2025, some Western central banks began lowering their policy interest rates. However, in the context of recent inflationary increases, the Fed has slowed its pace of policy interest rate cuts to a maximum of 0.5 percentage points in 2025. This will put pressure on other central banks that want to continue lowering interest rates. High interest rates will negatively impact consumer demand. In addition, the Fed's slowdown in interest rate cuts could put pressure on currencies in Asian markets, such as the Japanese Yen and the South Korean Won, which would reduce purchasing power in those markets.

Regarding inventory levels and sales for major brands, by the end of 2024, the inventory-to-sales ratio of major brands—such as Nike, Inditex, GAP, H&M, and Puma—showed signs of increasing, partly due to attempts to boost inventory levels before Trump's inauguration. More specifically, overall inventory figures halted their downward trend, while some brands saw inventory increases. Meanwhile, revenue continued to grow steadily thanks to year-end demand.

Overall, consumer confidence indices in major markets weakened in late 2024 and early 2025. Indices in most major markets declined from November 2024. Notably, the US confidence index recorded a significant drop in February 2025, falling below 70. Mirae Asset believes that the likelihood of higher inflation and a slower pace of interest rate cuts by the Fed are the main reasons for the decline in consumer confidence.

Regarding short-term risks, Mirae Asset believes that macroeconomic uncertainties, such as geopolitical issues and the US government's tariff policies, will be the main risks to textile demand in 2025. Despite recent developments in negotiations surrounding the Ukraine-Russia and Israel-Hamas conflicts, tensions between the countries remain high, posing significant risks to the economy.

In the long term, with the increasing inflow of FDI into Vietnam, textile and garment companies may face pressure from rising labor costs. Furthermore, it is now easier for Vietnamese workers to find jobs abroad, increasing wage competition domestically.

Source: https://baodaknong.vn/nganh-det-may-truoc-kho-khan-va-co-hoi-dan-xen-243376.html