Apparel / Textiles & Accessories

The latest barometer of trade in goods released by the World Trade Organization (WTO) recently shows that the global demand for trade in goods is cooling due to the continued impact on the global economy, and the growth rate of trade in goods may further slow down by the end of 2022 and 2023.

In fact, the haze of the global economic slowdown has enveloped the textile and clothing industry in Asia. According to the latest data released by Vietnam, Bangladesh, Pakistan and other major textile and garment countries, the export situation of textile and garment industries in various countries is grim, and there has been a decline in exports to varying degrees!

The export value of ready-to-wear in 2022 will be lower than the predetermined target

According to customs data, Vietnam's clothing exports reached 3.18 billion US dollars in October, down 3.3% annually. Among exports, yarn exports decreased by 34% annually to 307 million US dollars, while textile exports only increased by 11.7% to 2.87 billion US dollars. At the same time, clothing exports to the United States, South Korea, China and other major markets declined.

In addition, according to customs data, Vietnam has imported 1.28 million tons of various types of cotton since the beginning of this year, down 14% year on year. In the first half of November, it imported 78000 tons, down 26% from the first half of October. Since October 2022, the retail sales of clothing and footwear in Vietnam's main export market have seen negative growth, indicating that textile and garment enterprises will have another difficult season. While the demand slows down, the inventory of clothing products of retailers and brands continues to remain high, which will still put pressure on Vietnam's textile order prospects in the first half of next year.

Wu Dejiang, Chairman of the Vietnam Textile and Garment Association (VITAS), said that Vietnam's clothing exports are expected to reach 42 billion US dollars by the end of 2022, slightly lower than the target of 430-44 billion US dollars set this year.

Indonesia - textile industry recession may continue until 2023

The export performance of Indonesia's textile industry from September to October 2022 is 30% lower than that of the same period in 2021, and the recession is likely to continue until 2023. According to the Indonesian Textile Association (API), Indonesian textile companies have laid off 45000 employees, and some companies have reduced factory operating hours to reduce costs. The Indonesian Employers' Association (APINDO) has recommended to the government to strengthen industrial policies or take trade remedies and other measures to protect domestic industries.

The recent decline of Indonesian textile industry has been affected by a variety of factors, including a sharp decline in demand in Europe and the United States, and the purchasing power of Indonesian domestic demand is not stable; The textile industry believes that Indonesia is flooded with imported products, affecting the sales performance of domestic products; Indonesian textile industry still relies on imported raw materials; Indonesia's electricity price for production is less competitive than Vietnam and Bangladesh.

Another important factor is that Indonesian textile industry still relies on imported raw materials. In 2021, for example, Indonesia imported 1.86 billion US dollars of cotton, but exported only 860 million US dollars of textile products. The recent international inflation and the devaluation of the Indonesian rupiah against the US dollar have led to an increase in the cost of raw materials imported by the Indonesian textile industry.

India's textile exports fell 41% in October

The global economic slowdown has hit India's textile and clothing exports, resulting in its share of total merchandise exports falling from 9.72% in the same period last year to 7.68% in October 2022. According to customs data, in October, textile exports fell by 41.53% year-on-year, while clothing exports fell by 21.16%.

The high inflation in developed countries has reduced the purchasing power of consumers, which is the main reason for the slowdown in the export of textiles and clothing, making developing countries including India face serious challenges in the export of textiles. Compared with the same period last year, the cumulative exports of India's textiles and clothing fell by 34.18% in October 2022.

Due to cotton farmers' reluctance to sell cotton, India's cotton exports have decreased significantly recently. Indian industry officials said that despite the increase in India's cotton production this year, Indian traders are now difficult to export cotton, because cotton farmers expect the price to rise in the next few months, thus delaying the sale of cotton. An Indian cotton exporter said that up to now, India has signed a contract to export 70000 bales of cotton, compared with more than 500000 bales in the same period last year. The trader said that unless the Indian cotton price fell or the global cotton price rose, the export was unlikely to gain growth momentum.

Pakistan - Textile exports will fall sharply

It is reported that Pakistan's textile exports will fall sharply, or at least according to the latest monthly trade report of the Pakistan Bureau of Statistics. According to customs data, the export volume of most of Pakistan's medium and low-grade textiles showed a double-digit decline from July to October this year. If the export volume of clothing is not stable, the country's textile export will have a negative growth.

However, it may not be long before clothing exports will "surrender", at least in the case of cotton imports from July to October this year. According to customs data, Pakistan's cotton imports from July to October this year just exceeded 1 million bales, the lowest level since September to December 2019. If the current average monthly import level of 250000 bales continues, the annual cotton import volume will not exceed 3 million bales, which is the lowest since fiscal 2016. For most of the past decade, Pakistan's cotton consumption was 1250-13.5 million bales, of which cotton imports accounted for 40% of the total demand.

For 2023, Pakistan's cotton import is likely to rebound, but the annual import volume is also difficult to reach the peak of 5 million bales in the past two years. At present, it is inevitable that Pakistan's textile exports will fall sharply in the 2023 fiscal year.

Bangladesh - Garment exports decline and yarn mill inventory keeps piling up

Due to the decrease of 30% in clothing orders from international clothing retailers and brands, the unsold yarn inventory of Bangladesh spinning mills is accumulating abnormally. According to the data of Bangladesh Textile Mills Association (BTMA), the yarn inventory has exceeded 500000 tons in the past two months.

The yarn consumption of export garment factories has decreased from 12 million kilograms per day to nearly 5 million kilograms. Similarly, due to the sharp drop in consumer demand caused by the price rise, the yarn output of the spinning mills facing the domestic market in Bangladesh also fell sharply.

Bangladesh's spinning mills are facing a double blow from the yarn industry. On the one hand, due to the serious natural gas and power crisis, the spinning mill can only operate at 50% of its capacity. On the other hand, the inventory of unsold yarn has increased. Industry insiders said that if the spinning mill can operate at full capacity with sufficient natural gas supply, the yarn inventory will further increase.