Textile and garment exports in the face of inflationary pressure

Influence from the "heat" of inflation

According to economic analysts, rising inflation and financial tightening have cast a shadow over the US and European economies, leading to a decline in global demand since the second quarter of 2022.

Specifically, in the US, inflation in August was higher than forecast despite the continuous decline in gasoline prices during the past time (according to a new report published by the US Bureau of Labor Statistics). Accordingly, the total consumer price index (CPI) increased by 0.1% month-on-month and 8.3% year-on-year in 2021. If energy and food costs are excluded, core CPI increases. 0.6% from July and 6.3% from the same period a year ago. If year-over-year, gross and core inflation is at 8% and 6%, respectively.

In the EU, according to a quick estimate from the EU Statistical Office (Eurostat), inflation in the euro area in August 2022 on a year-on-year basis increased to a record high of 9.1%.

Xuất khẩu dệt may trước sức ép lạm phát

Export orders of many businesses are falling sharply

Inflation in the US and EU is negatively affecting the textile and garment exports of Vietnamese enterprises because these are two traditional markets - accounting for a high proportion of the export structure of this industry.

Talking to a reporter of Industry and Trade Newspaper, Mr. Pham Xuan Hong, Chairman of the City Textile, Embroidery and Knitting Association. Ho Chi Minh commented, although in the first eight months of 2022, the export turnover of the textile and garment industry has reached 30.1 billion USD, but the growth mainly falls in the first months of the year and from July 2022 to now, businesses are facing difficulties. towel.

“According to the information we know, there are many textile and garment enterprises in the city area. Ho Chi Minh is seeing a sharp drop in orders. The declining markets focused on the US and EU because the inflation pressure from these countries was large, forcing consumers to tighten spending, while textiles and garments were not essential goods, "- Mr. Hong said.

An analysis report on the textile industry published by VNDirect Research recently also commented that the demand for high-end clothing items such as shirts and t-shirts made from recycled and cotton fibers (high prices) more) will slow down in the second half of 2022.

Also according to this report, the management of garment companies said that US customers have shortened the pre-order time from 6 months to 3 months due to high inventories and inflationary pressures. Currently, only a few large enterprises such as Thanh Cong (TCM), Century Yarn (STK), Damsan Joint Stock Company (ADS) have enough orders for the third quarter of 2022, but some customers have canceled orders. due to high inventory. Meanwhile, orders in the fourth quarter of 2022 slowed due to inflation concerns.

In the EU market, Mr. Pham Van Viet - Chairman of the Board of Directors of Viet Thang Jean Co., Ltd. also admitted that the orders of this business had decreased by over 30% and they were forced to cut working hours to maintain the job. core.

Brighter door from the beginning of 2023?

Mr. Pham Xuan Hong said that the export situation is unlikely to recover soon but will still be difficult in the last months of this year. “At the moment, businesses are managing to stay afloat. Accordingly, large enterprises with abundant orders tend to share orders with businesses lacking orders. Others are looking for short-term opportunities in the domestic market," said Mr. Hong.

Besides, businesses are making links to find orders in new markets. For example, businesses belonging to the Textile, Embroidery and Knitting Association of Ho Chi Minh City. Ho Chi Minh City recently cooperated with businesses in India and Pakistan to exchange orders into these markets.

Forecasting the prospects of this industry in the near future, according to VNDirect Research, the textile and garment industry will be brighter in the first quarter of next year because textile products will be reduced in export tax to the EU market in 2023 thanks to the Agreement. EU-Vietnam Free Trade Agreement (EVFTA). Because under this FTA, garments including B3, B5, B7 will be reduced by 2-4% of export tax in 2023.

In addition, the European Commission forecasts that inflation in the euro area will reach 8.3% in 2022, before falling to 4.3% in 2023. “We think inflation is lower. will stimulate shopping demand for fashion items in 2023. Therefore, we expect some textile enterprises to export suits, shirts, pants and skirts to Europe such as Song Hong Garment, May 10, Viet Tien… will benefit from EVFTA” - VNDirect Research expert expects.

Mai Ca

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