With a growth rate averaging 34 percent in 2007, Vietnam's textile and garment industry was full of energy and optimism at the beginning of 2008. Beginning from January till August 2008, the industry received abundant orders and was on the way to completing its targets for the year.
But the winds changed midway in September, with the unfolding of the economic crisis in the US, and from then onwards the sky fell on the industry, leading to a slowdown in to the next four months and which is continuing in 2009, with no one willing to guess the exact dates of the beginning of the revival.
In March, April and May, the exchange rate between US dollar and the Vietnamese VND fluctuated unpredictably. The scarcity of the US dollar and the high exchange rate increased the cost of imported materials, while on the other hand realization from exports fell, leading to a loss for many enterprises.
In the first eight months of 2008, the high interest rates made the burden heavier and exports costlier and the global economic crisis causing loss in orders dealt the industry a severe blow September onwards. So, the industry has had a bad 2008, irrespective of the various factors affecting the industry at different times.
The economic crisis lead to reduced orders from the three biggest markets of the textile and garment industry; US, EU and Japan. Orders declined by as much as 20 percent in the last quarter of 2008 compared to the same period of 2007. But in spite of all, the industry could achieve an export turnover of US $9.1 billion, equal to 96 percent of the target.
Despite missing targets set for the year, the sector was able to clock a impressive growth rate of 17-18 percent and thereby stand at number 2 in rankings, which no other country other than China has been able to emulate. The industry was able to garner a growth rate of 18 percent in shipments to the US, while other countries witnessed a decrease.
Irrespective of the fact that the sector could not complete its export targets, the industry was able to prove its competitiveness by chalking excellent growth rates. In 2009, the industry aims to achieve an export target of $9.2 -9.5 billion, which has been brought down from the preset target of $11 billion.
Fibre2fashion News Desk - Vietnam
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