Cost-of-living crisis in major economies dashes hopes for a strong recovery

In 2022, the global textile industry experienced a revival in demand, although it remained shy of reaching the heights seen prior to the pandemic in both production hubs and end markets. The industry now faces a challenging mix of persistently high costs for raw materials, a sweeping cost-of-living crisis and evolving consumer preferences, which collectively set the stage for a demanding landscape for the quarters to come.

With historically high inflation denting households' purchasing power, consumer spending on fashion is under pressure and secular trends such the rise of ultra-fast fashion brands and the purchase of second-hand goods are only gathering steam. While positive for volume growth, ultra-fast fashion is contributing to pushing prices down and forcing manufacturers, agents and wholesalers to adapt to an even faster pace, putting supply chains under additional pressure. Because it is conversely detrimental to volume growth, the second-hand market is increasingly being embraced by retailers that are introducing trade-in programmes for old clothes.

Among the most resilient end-markets, the sportswear and luxury goods categories are expected to continue to post above-average performance, but signs now abound that their growth has peaked. Similarly, the reopening of the Chinese market in the first half of 2023 has fallen short of expectations and its positive impact on demand appears to be short-lived.