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Southeast Asia's garment trade declines

Garment and footwear trade between Southeast Asia and the United States is declining due to high inflation, casting a gloomy shadow over the industry. Recent analysis of U.S. customs data indicates a 20% to 30% drop in the value of apparel and footwear shipments from Cambodia, Bangladesh, Myanmar, and Vietnam during the initial four months of this year. 

Exports to the European Union are also showing signs of slowing, with Bangladesh experiencing a 3% decline in garment exports and Cambodia witnessing a slight dip. Although Vietnam initially saw growth in garment exports to the EU, the latest figures for April demonstrate a significant decrease compared to the previous month.

 The decline comes after a strong recovery in shipments following the pandemic, but Southeast Asian nations heavily reliant on garments, footwear, and travel goods, such as Cambodia, have faced an overall 30% export decrease during the first four months of this year. Industry insiders attribute this decline to inflation and the economic repercussions of Russia's invasion of Ukraine. 

Additionally, the failure of the U.S. Congress to renew the Generalized System of Preferences, which offers duty-free access to certain goods, has affected exports of travel goods. Despite stable employment figures thanks to new investors, ongoing uncertainties and the clearance of retail backlogs contribute to a cautious outlook for the rest of 2023. 

Fashion companies are grappling with a challenging sourcing environment due to shrinking demand caused by inflation and reduced consumer spending. Many U.S. fashion companies have responded by cutting sourcing orders and reducing inventory, resulting in a decline in trade volume. 

Ongoing trade tensions, including the continuation of tariffs on Chinese exports, further compound the challenges faced by U.S. brands. In response, fashion companies are prioritizing sourcing flexibility and diversifying their supply base. While they consider near shoring in the West, Southeast Asian countries remain attractive despite the difficulties of finding new production capabilities.



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