The US, EU economic downtrend to have domino effect on world's apparel exports

25 November 2022, Mumbai:

Setting context to how countries are responding to the Western world's impending slowdown/recession given the global economic outlook put out by IMF very recently which doesn't augur well considering global economic fragile health that has not yet quite fully recovered from the pandemic shock.

What all you need to know

Same here back home when one was to evaluate the Apparel Trade Scenario in Key Global Markets including India in the month of Nov 2022’ reflects apparel/garment export presently was nowhere up to the mark, given a serious fall witnessed to the tune of 24 percent compared to the period October 2021.

Albeit, it was noticed that its is YTD basis still 11per cent higher than in 2021. But the devil lies in details, to be borne in mind the persistently high inflation, there is no effective volume growth over the period 2019.

Understanding the Consumer Confidence

The article is an effort to debunk leaving you with insights that what ails the global economy and the persistence of red-hot inflation hurting business confidence. Putting a spotlight on Indian apparel exports reveals a rise of 8 percent in exports to the US market, whilst it reported a fall in exports to the UAE and the UK by 3% & 1%.

Furthermore, it reflected in the period of January-September 2022 on the whole apparel exports clocked were around $12billion & interestingly it was broadly attributable to the US exports achieving 35 percent share, at the same time the breakdown was; the UK had a 9 percent share, the UAE 8 percent, Germany 6 percent, France 4 percent and others made up 38 percent.

Given the gloomy global economic outlook, there is no point Tom-toming consciously knowing given Europe is undergoing currently inflation-ridden crisis on the back of an energy price crisis/cusp of energy poverty and the UK officially slumped into recession and prognosis that the US economy will likely fall into a mild recession by the end of 2022 as the Federal Reserve raises rates to tame prices, according to economists at Nomura Holdings Inc. is likely to have an infectious impact on apparel/garment exporters in 2023.

One man's loss is another man's gain

Around the world, Japan’s apparel imports as of August 2022 were worth $2.8 billion reportedly it was 23 percent more than the corresponding August 2021. Let us look at how has China fared; In the US market, China witnessed a steep fall in apparel/garment exports notably its market share gradually shrank by 8 percent since the year 2019.

Beneficiaries; No wonder Vietnam and Bangladesh were the clear gainers registering a growth of 3 percent apiece. Although India also had a marginal increase of 1 percent.

Stepping back a little let us shift focus to the US market in the month of September 2022, apparel imports there were worth $9.6 billion which is 18 percent higher than the corresponding period of September 2021. Although to have a broader understanding on a year-to-date (YTD) basis, the imports are 35 percent more than in the year 2021.

Bird's Eye View of Europe

The trade data pinpointedly stresses that China is holding out its share/steadfast in the EU in the evaluation period of the year 2019-2022 with a healthy 29 to 30 percent share. The same also goes for India's credit, holding steady at 5 percent.

Bangladesh view

However, one needs to state here that China and India both haven’t seen secular growth whereas Bangladesh has grown by 3 percent with a 23 percent share in 2022. What is commendable about Bangladesh was in the January-August period of 2022, it had hit €14.35 billion worth of exports Vs.€8.85 billion in the corresponding period in the year 2021.

It does not surprise many considering Bangladesh's ongoing initiative of stress on green production expectedly, it is well set to pickup/is in a good position today China’s share in the EU in coming years on the back of the "EU's New Regulations End Greenwashing".

Vietnam & Turkey

Turkey and Vietnam–holding out but clocking no great growth. No brainer visibly encouraging EU’s import figures does not really move the needle as much, knowing that impressive growth numbers are owing to a low base value and inflated prices. The lowdown on numbers clearly reflects that the EU’s apparel imports like to like comparison in the month of September 2022 were around 42 percent more compared to the corresponding period in 2021. Shedding light on The EU apparel/clothing imports bucket from January-August 2022 stood as follows; €73. 4 billion, with China at 29 percent, Bangladesh at 23 percent, Turkey, India, and Vietnam at 12, 5, and 4 percent, respectively; while others clocked in 27 percent.

The country called the UK

The UK market has a tad different story to reflect given China, Bangladesh and Turkey have experienced a rise in their exports by 5, 4, and 3 percent respectively.

Throwing light on the UK’s garment/apparel import bucket for January to August 2022 showing a figure of 15.4 billion with China’s share coming at 24 percent followed by the expected lines; Bangladesh at 19 percent, Turkey at 10 percent, India and Italy at 7 and 5 percent respectively; leaving others accounting for 36 percent. When it comes to garment/apparel sales, the year-to-date (YTD) performance in the UK is 23% higher, and while only in October, it was 3 percent higher than the previous October standing at a total value of £ 3.5 billion.

On the whole, the outlook of apparel sales, imports, and exports is positive but the uncomfortable reality of lack of global economic visibility makes 'Economic Predictions' difficult.

(CREDITS: Wazir Advisor’s latest report)

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