The textile and clothing sector bears the brunt of global uncertainties

VIETNAM, October 26 –

HÀ NỘI — Textile and apparel companies are under pressure due to declining purchasing power caused by rising inflation and other global uncertainties.

According to the General Bureau of Statistics, sharp declines in exports were recorded in the United States, Europe, Japan, the Republic of Korea (RoK) and China.

Exports of textiles and clothing in September fell nearly $1.2 billion, or 27%, from the previous month to $3.2 billion.

According to the SSI Securities Corporation, the number of orders placed for the fourth quarter of 2022 fell 25-50% from the second quarter, when orders rose sharply, as unsold inventory in import markets is currently students.

Many companies have received orders for delivery in the first quarter of 2023, but the number of orders is still well below capacity.

SSI said companies whose buyers are primarily in the United States and Europe would be hit harder than those exporting to Japan and the Republic of Korea.

Besides inflation, fluctuating material prices are also a problem.

Lê Tiến Trường, chairman of Việt Nam National Textile and Garment Group (Vinatex), said there were uncertainties until the end of the year, especially the Russian-Ukrainian conflict and fluctuations in material prices. .

Companies were looking for ways to diversify material supply sources as well as export markets, because when material sufficiency is ensured, they could increase shipments to many markets, helping to ensure production stability, supply chain and sustainable exports, he said.

Another challenge concerns exchange rates, according to analysts.

Nguyễn Đức Hào, a specialist at VNDirect Securities Corporation, said the euro had continuously depreciated due to fears of recession due to Russia’s threat to cut gas supplies to many European countries, adding that companies could suffer lower profits and even losses.

Echoing this view, SSI found that most textile and apparel companies earn revenues in US dollars, but many of their costs such as materials, logistics and loans are also calculated in US dollars. .

While the export outlook was gloomy, the VNĐ/USD exchange rate is expected to continue to fall in the last half of this year, which would negatively impact businesses, especially those with high expenses calculated in U.S. dollars. —VNS

Michael O. Stutler