The textile industry is expected to grow in the second half of 2024 as orders increase
- According to the Vietnam Customs (GDC), in the first six months of 2024, the export value of textiles and garments saw a slight increase compared to the same period last year, reaching USD 16.5 bn (+4.6% YoY). The monthly export value also rebounded in June, reaching USD 3.16 bn (+2% YoY) as a 2% growth in the US market, while other markets remained weak.
- We expect the textile industry to grow in the second half of 2024 due to increased production, as the import value of fabrics in the first six months of 2024 reached $7.2 billion (+12.7% YoY) with an export value of $1.2 billion in June (+15% YoY), and the selling prices of various yarns have increased compared to the same period last year. In addition, according to our July 2024 macro report, the sharp rise in Vietnam’s PMI index to 54.7 points in June 2024 also signals optimistic manufacturing activity in the second half of 2024.
- Gross margin of textile and garment enterprises is unlikely to increase in the second half of 2024 as (1) the minimum wage increasing by 6% from July 2024 and (2) average selling prices are unlikely to increase. Average selling prices are difficult to increase as (1) it is forecast that the currencies of competing countries such as Bangladesh, Indonesia and Mexico will depreciate highly compared to VND and (2) demand in the US is still weak.
- Vietnamese enterprises are gradually shifting to high value-added and complex products as Bangladesh holds a cost advantage in high-volume, low-value products. Sportswear items from TNG, MSH, TCM, HDM, and TVT will face less competition from Bangladesh in the short term.
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