The first 2 months of 2023 did not yield positive results for Vietnam’s wood industry. According to the Vietnamese Customs Department, earnings relating to wood and wood products exports for January and February 2023 stands at 1.6 billion dollars, which lags behind that of January and February 2022 by a whopping 34,8%. Wood products exports alone have taken a tremendous hit, with February 2023 export figures currently at 490 million dollars, a decline by 29,7% compared to February of the previous year.
There are many factors that are causing damage to Vietnam’s export figures by hampering demand and reducing orders from two of Vietnam’s largest markets, Europe and North America. As Russia was the biggest energy supplier for Europe, current western sanctions to punish its illegal invasion of Ukraine means Russian gas no longer reaches European households, significantly increasing energy prices for European citizens who are now less prone to spend their money on luxury goods such as wood ornaments and furniture. Previously popular Russian products that Vietnam sells, especially Russian Birch, are no longer able to reach markets in Europe and America due to boycotts and sanctions. The American market on the other hand, sees a sharp decrease in the housing sector, partly due inflation and spikes in mortgage rates. This reduces overall demand for wood export and wood products in general from the US. .
With the situation in Europe showing no sign of improving, Vietnam’s wood export can expect more hardship for the next few months. Although analysts remain hopeful for a quick end to the War in Ukraine, bringing peace and more importantly, normality to world trade. Although it’s hard to say whether or not the West would be willing to resume business with Russia any time soon.
Current forecasts place the Vietnamese wood industry’s recovery point towards the end of 2023 second quarter, with the desired growth around 7% to 9%. To make use of this up and coming opportunity, the Ministry of Agriculture and Rural Development as well as the Association of Vietnam Timber and Forest Product are calling for increased use of domestic wood and minimizing the use of imported wood by inviting more foreign investments to facilitate the planting of more domestic timber.
Source: https://goviet.org.vn/bai-viet/2-thang-dau-nam-2023-xuat-khau-go-va-san-pham-go-giam-2-con-so-9932, https://www.globalwoodmarketsinfo.com/vietnams-wood-exports-have-fallen-sharply-due-to-lack-of-orders/, https://edition.cnn.com/2023/03/08/homes/housing-shortage/index.html, https://vietnamnet.vn/en/lack-of-orders-plague-wood-export-businesses-2131585.html