The Ministry of Industry and Trade anticipates Vietnam’s wood export recovery in 2024

Despite the 13th consecutive monthly decline in November 2023, manufacturing executives in the United States remain hopeful for economic and business improvement in 2024, as reported by Furniture Today.

The American Institute of Supply Management (ISM) revealed that, based on surveys conducted with manufacturers, 15 out of 18 industries assessed by ISM anticipate an increase in revenue in 2023, with an estimated growth of about 5.6%. Additionally, employment is expected to rise by 2% in the same year.

The ISM noted that executives in purchasing and supply activities within the manufacturing industry generally foresee overall growth in 2024. They maintain an optimistic view of the overall business outlook in the first half of 2024, with even faster growth expected in the second half.

Respondents to the survey anticipate alleviating raw material price pressures in 2024, leading to improved profit margins in the first half of 2024 compared to the second half of 2023. Consequently, wages and employment are expected to continue increasing.

The furniture industry, in particular, is forecasted to witness revenue and production output improvements. Among various industries, furniture is expected to experience the most significant increase in capital spending in 2024. It is also one of the 14 industries that reported higher capital spending in 2023 than in 2022.

The United States is the world's second-largest import market for wooden furniture. According to the US International Trade Commission (USITC) statistics, during the initial ten months of 2023, US wooden furniture imports totaled $16.4 billion, marking a 25% decline compared to the same period in 2022. This substantial decrease in imports can be attributed to weak market demand resulting from escalating interest rates, cyclical factors, and the substantial inventory reserves in the United States. 

Notably, following a period of restrained consumer spending that led to a sharp decline in demand for non-essential items like wooden furniture, the third quarter witnessed a significant surge in sales in the United States, accompanied by a simultaneous reduction in inventories.

Vietnam holds a crucial position as the largest supplier of wooden furniture to the United States, constituting 36.4% of the total import value. Despite a slight downward trend in the proportion of imports from Vietnam over time, the decline is not substantial. This underscores the enduring appeal of Vietnamese wooden furniture products to US consumers. 

Supporting this observation, it is estimated that in the fourth quarter of 2023, Vietnam's export value of wood and wood products will reach $3.75 billion, reflecting a 5% increase compared to the third quarter of 2023 and a 0.3% rise compared to the fourth quarter of 2022. Specifically, the export value of wood products is anticipated to be $2.6 billion, demonstrating a notable 10.4% surge compared to the third quarter of 2023 and a 5.9% increase compared to the fourth quarter of 2022.

While the export trend for wood and wood products recorded a positive growth rate in the fourth quarter of 2023, the recovery momentum remains gradual.

In the Agriculture, Forestry, and Fisheries Market Bulletin for the fourth quarter of 2023, the Ministry of Industry and Trade observed: The aforementioned signals indicate a potential recovery in consumption within the US market in 2024, encompassing a renewed demand for agricultural and wood products.

To boost the export of wooden furniture to the United States, the Ministry of Industry and Trade advises that the US, being a highly competitive market, necessitates businesses to invest efforts in research and market development consistently. This involves enhancing production capacity, improving product quality to meet technical standards, and adhering to regulations on sustainable development.

In addition to elevating product quality and reducing production costs, Vietnamese businesses must prioritize effective customer care.

While the EU remains the world's largest market for imported wooden furniture, European Statistics Agency (Eurostat) reports a 10.6% decline in EU imports of wooden furniture, amounting to $18.1 billion in the first nine months of 2023 compared to the same period in 2022.

The diminishing demand for imported wooden furniture in the EU can be attributed to the impact of high inflation, coupled with increasingly stringent regulations on product legality and sustainability. Notably, the EU Anti-Deforestation Regulation (EUDR) took effect at the end of June 2023. Furthermore, the EU has introduced regulations setting new limits on formaldehyde in consumer products, particularly for wooden products and furniture, with a specified limit of 0.062 mg/m3 in the future.

The outlook for 2024 indicates that the combination of new regulations and subdued consumer demand in the EU is unlikely to facilitate a rapid recovery, signifying a lack of positive signs in the import activities of wooden furniture within the EU.