HCMC – Inflation in many developed economies has led to a sharp decline in the demand for many of Vietnam’s export products.
The second half of the year saw sluggish growth in the textile, clothing, leather and footwear sectors, said Pham Van Viet, board chairman of Viet Thang Jean Company Limited. The company’s exports to the European market have declined some 20% so far, he added.
Enterprises were concerned about the European market’s squeeze on spending power as a result of the euro falling back to parity with the U.S. dollar.
If the situation persists, the market demand for imported goods could plunge, posing a challenge for global exporters, including Vietnam.
Earlier, Vietnamese exporters often saw orders sufficient for one or two quarters’ production; however, now, the orders are only for two or three months’ operations due to uncertainty.
A representative of Vinh Thanh Wood Company Limited said its sales have been impacted, with only a tenth of its products exported to the Western markets compared to previous years.
Inflation led to higher raw material and logistics costs, together with a decline in demand and sales, sending businesses into a tailspin.
According to the Vietnam Leather, Footwear and Handbag Association, high material and logistics costs have pushed product prices up.
In the first half of 2022, the export turnover of the leather, footwear and handbag sectors rose 12.8% over the same period last year, but the increase was mainly thanks to the contracts signed last year.
A probable recession in the U.S. economy will absolutely affect Vietnam’s exports, economists warned.