Vietnam exporters face demand slowdown despite strong first-half growth

Vietnam's textile and apparel industry recorded strong growth during the first five months of 2026, with exports rising 5.6% year on year to reach $18.8 billion, according to Vietnamese state media.

The positive performance came despite weak global demand and a challenging business environment. However, industry leaders are increasingly cautious about prospects for the second half of the year.

According to Cao Huu Hieu, General Director of Vietnam National Textile and Garment Group (Vinatex), Vietnamese exporters benefited from a temporary opportunity created by recent US tariff developments. Manufacturers accelerated production and shipments to maximize orders during a favorable tariff window.

The export growth also keeps the industry on track toward its 2026 export target of approximately $48 billion to $49 billion, according to the Vietnam Textile and Apparel Association (VITAS). However, achieving that goal will require strong performance in the remaining months of the year as global demand conditions remain uncertain.

Despite the strong export results, concerns are growing across the industry. Fourth-quarter order visibility remains limited, while container shipping costs have increased by 30% to 40%. Competition from other sourcing countries is also intensifying, putting additional pressure on exporters.

Industry experts noted that rising inflation in key consumer markets, including the United States, European Union, China, Japan, and South Korea, is affecting consumer purchasing power. Higher living costs are reducing spending on apparel and creating uncertainty around future demand. Brands and retailers are also maintaining cautious inventory strategies, leading to shorter order cycles and more selective sourcing decisions.

Market performance has varied across export destinations. While shipments to the United States have remained relatively resilient, exports to some Asian markets have shown signs of weakness. Meanwhile, exports to the European Union have continued to benefit from trade advantages under the EU-Vietnam Free Trade Agreement, helping offset softer demand elsewhere.

In response, manufacturers are placing greater emphasis on financial discipline. Companies are working to maintain stable cash flow, optimize inventory levels, and reduce unnecessary operating expenses to protect profitability.

The Vietnam Textile and Apparel Association (VITAS) has urged businesses to strengthen non-price competitiveness instead of relying solely on low-cost production. The association is encouraging manufacturers to expand higher-value business models such as FOB (Free on Board) and ODM (Original Design Manufacturing) to improve market positioning and support long-term growth.