Vinatex is concerned that low demand for clothing will continue.

Textiles contribute the most to export growth. Vinatex provides information about the fire at the Vinatex Phu Cuong yarn factory.

According to Mr. Vuong Duc Anh, Chief of the Board of Directors' Office of Vietnam Textile and Garment Group (Vinatex), Vietnam's textile and garment export turnover in July 2023 reached US$3.81 billion, a decrease of 9.4% compared to the same period last year, but an increase of 6.2% compared to June 2023. For the first seven months of 2023, textile and garment exports reached US$22.5 billion, a decrease of 15.9% compared to the same period in 2022.

Vinatex is concerned that low demand for clothing will continue.

Regarding market forecasts, Mr. Vuong Duc Anh commented that for the garment industry, the low demand of 2023 may extend into 2024. The market in the last months of 2023 lacked upward momentum; total demand may only increase naturally with year-end holiday seasons. For the US market, garment imports in the last six months of the year are expected to increase by 10% compared to the first six months, bringing the total garment import value for 2023 to $80 billion (a 20% decrease compared to 2022). For the Japanese market, the upward trend of the first six months may continue, however, it could be impacted by a 5-7% price drop due to the continued depreciation of the Yen, as predicted by JP Morgan.

Regarding the cotton and fiber market, cotton prices in the last six months of 2023 are expected to increase slightly, fluctuating between an average of 82-88 cents/lb, equivalent to 2.1-2.3 USD/kg. Polyester fiber prices may fluctuate slightly in line with oil prices, ranging from 1-1.05 USD/kg, with oil prices forecast to remain around 80-90 USD/barrel. While the yarn market in Q3 remains low, similar to Q2, demand and prices in Q4 will improve slightly based on lower cotton and fiber input prices. Therefore, yarn businesses may reduce losses as high cotton prices are used up, while yarn prices are expected to remain relatively stable.

Analyzing several forecasts for exchange rates in the last five months of 2023, Vinatex Chairman Le Tien Truong stated: The depreciation of the Vietnamese Dong against other countries' currencies is very low, with the Dong depreciating by 1.48%, while the Chinese Yuan depreciated by 7.15%, the Japanese Yen by 8.29%, and the New Taiwan Dollar by 5.59%... Therefore, the pressure for the Dong to depreciate is very high when monetary policy is loosened. A stronger US dollar and higher interest rates against the Dong pose a significant risk of attracting capital outflows from Vietnam.

Furthermore, it is not yet the import season for Christmas production or Tet holiday consumer goods, so the demand for foreign currency will increase in the coming period. Based on these forecasts, it is likely that the VND will depreciate by another 2% by the end of 2023. Therefore, businesses need to consider implementing flexible management solutions to avoid negative impacts on their annual business results due to exchange rate fluctuations.

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