Vietnam’s wood industry has unexpectedly fallen into an unprecedented slump amid a sharp decline in orders.

According to the Vietnam Association of Timber and Forestry Products (Vifores), Vietnamese exports of timber and wood products during the first three months of the year dropped by 28.3% to US$2.88 billion against the same period last year.

Of the figure, the export value of wood products stood at an estimated US$1.87 billion, an annual drop of 38.5%.

March alone witnessed timber and wood products rake in US$1.2 billion in export turnover, a decline of 22.8% compared to last year’s corresponding period.

Explaining the reason for the sharp fall, Vifores said that global consumer are tightening their belt due to rising inflation and economic recession risks, leading to a shortage of orders.

Currently Vietnamese businesses only have several orders to be met until June as foreign importers have a large inventory, said Do Xuan Lap, chairman of Vifores.

Vifores shared that exports of wooden furniture to the US nosedived steeply due to the US housing demand index in February decreasing by 48.1% over the same period last year, resulting in a sharp decrease in the demand for importing wood and wood products from the market.

Meanwhile, China represents Vietnam’s main competitor for wooden furniture in the US market, and the reopening of China’s economy will certainly cause difficulties for domestic wood businesses this year.

The US has always been one of Vietnam’s largest wood consumers, and the significant drop in exports to the market will therefore directly affect the overall export results, with the growth forecasted to be less positive in the first half of the year.

Furthermore, the EU’s new regulation on not importing any products or goods originating from deforested areas after December 31, 2020, will also be a factor hindering the growth of the wood industry.

Vifores stressed that many domestic businesses do not set profit targets and they only need enough orders to pay wages for workers and cover factory operations.

Moving into the second half of the year, exports of wood and wood products are expected to enjoy positive signs when the economy recovers. In addition, the travel demand of tourists is predicted to increase, thereby leading to the demand to replace interior products at hotels and restaurants.

Moreover, many businesses plan to find customers in other markets such as Japan, China, and the Republic of Korea to offset the decline from the main markets.

VOV