Vietnam’s textile and garment sector is showing signs of resilience in 2026, posting moderate export and profit growth, but industry leaders warn that weak global demand, rising costs, and tariff uncertainty are clouding the outlook for the remainder of the year.
Export earnings reached approximately $18.8 billion in the first five months of 2026, marking a 5.6% increase from a year earlier, according to official data. While the figures reflect steady progress in one of Vietnam’s key manufacturing sectors, the pace of growth remains modest compared to pre-pandemic expansion levels. Read here
Monthly export performance has been uneven. Shipments in May totaled around $3.19 billion, up 3.5% year-on-year, contributing to cumulative revenues of just over $15 billion for the first five months in some industry estimates. Analysts say the divergence in figures reflects varying measurement scopes across sub-sectors, including garments, textiles, and raw materials such as yarn and fiber.
A notable bright spot has been the recovery in fiber and yarn exports, which rose nearly 9% year-on-year to about $1.89 billion. This segment has benefited from improving global demand for intermediate textile inputs, as well as supply chain adjustments by international buyers seeking alternatives to China.
Vietnam’s growing role as a sourcing hub continues to support the industry. Trade tensions and diversification strategies among global brands have redirected orders toward Vietnamese manufacturers, allowing the country to gain market share even as total imports in major markets such as the United States remain subdued.
However, this structural advantage has not translated into uniform gains across the sector. Industry performance remains uneven, with some firms reporting strong revenue and profit growth while others struggle with declining margins and losses.
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Vietnam National Textile and Garment Group (Vinatex), the country’s largest textile conglomerate, reported a profit increase of more than 14% in the first half of the year, driven largely by a rebound in its yarn business. Revenue also rose, reflecting improved operational efficiency and better pricing conditions in certain segments.
In contrast, other companies face mounting cost pressures. Some exporters have posted significant revenue growth but reported shrinking margins due to rising logistics expenses, higher input costs, and increased selling expenditures. In more challenging cases, firms exposed to weaker demand segments have recorded revenue declines and financial losses.
Industry executives say one of the most pressing concerns is the lack of visibility in future orders. Global apparel demand remains fragile, particularly in key markets such as the United States and Europe, where consumers continue to exercise caution amid economic uncertainty. As a result, many manufacturers are receiving shorter-term contracts and smaller order volumes, complicating production planning and capacity utilization.
Tariff uncertainty adds another layer of complexity. A temporary U.S. tariff measure has created a short-term window for exporters to accelerate shipments, but the lack of clarity over future trade policy is making it difficult for businesses to plan ahead. Companies are rushing to fulfill orders within favorable timelines, but such gains are widely seen as temporary rather than indicative of sustained demand recovery.
At the same time, rising operational costs are eroding profitability. Freight rates, labor expenses, and compliance costs have all increased, while buyers continue to push suppliers to maintain competitive pricing. This dynamic has placed significant pressure on margins, particularly for companies operating in lower-value segments of the supply chain.
Despite these challenges, Vietnam has set an ambitious export target of $48–49 billion for the full year. Achieving this goal will require a substantial acceleration in the second half, with monthly export revenues needing to exceed recent averages.
Industry analysts say meeting the target will depend heavily on external factors, including the recovery of consumer demand in major markets and greater stability in global trade policies. Without a meaningful improvement in these conditions, the sector may struggle to maintain its current growth trajectory.
For now, the outlook remains cautiously optimistic. The industry has demonstrated resilience through diversification, cost management, and strategic adaptation to shifting market dynamics. However, the combination of weak demand, policy uncertainty, and cost pressures suggests that growth will likely remain constrained in the near term.
As one industry executive noted, the sector is no longer in crisis, but it has yet to regain a stable footing. The coming months will be critical in determining whether Vietnam’s textile and garment industry can convert its current momentum into sustained, long-term growth.
