Apparel / Textiles & Accessories

The latest goods trade barometer released by the World Trade Organization (WTO) recently shows that as the global economy continues to suffer from shocks, the global demand for goods trade is cooling down, and the growth of goods trade may further slow down at the end of 2022 and 2023.

In fact, the haze of the global economic slowdown has already enveloped the textile and clothing industry in Asia. According to the latest data released by major textile and clothing countries such as Vietnam, Bangladesh and Pakistan, the export situation of textile and clothing industries in various countries is severe, and the export has declined to varying degrees!

2022 ready to wear export value will be lower than the target

According to customs data, in October, Vietnam's clothing exports totaled 3.18 billion US dollars, down 3.3% annually. Among exports, yarn exports decreased by 34% annually to US $307 million, while textile exports only increased by 11.7% to US $2.87 billion. 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, Vietnam imported 78,000 tons, down 26% compared with the first half of October. Since October 2022, the retail sales of clothing and footwear in Vietnam's main export markets have shown negative growth, indicating that textile and clothing enterprises will usher in another difficult quarter. While the demand slows down, the inventory of clothing products of retailers and brands remains high, which will still exert pressure on Vietnam's textile order prospects in the first half of next year.

Wu Dejiang, chairman of Vietnam Textile and Garment Association (VITAS), said that Vietnam's clothing export is expected to reach 42 billion US dollars by the end of 2022, slightly lower than the target of 43 billion US dollars to 44 billion US dollars set this year.

Indonesia - Textile industry recession may last until 2023

From September to October 2022, the export performance of Indonesia's textile industry declined by 30% compared with the same period in 2021, and the decline is likely to last until 2023. According to the Indonesian Textile Association (API), Indonesian textile companies have laid off 45000 employees, and some companies have reduced the operating hours of their factories to reduce costs. The Indonesian Employers Association (APINDO) has proposed to the government to strengthen industrial policies, or take trade remedies and other measures to protect domestic industries.

The recent decline of Indonesia's textile industry is affected by many factors, including the sharp drop in demand in Europe and the United States, and the purchasing power of Indonesia's domestic demand is not yet stable; The textile industry believes that Indonesia is full of imported products, which affects the sales performance of domestic products; Indonesian textile industry still relies on imported raw materials; The price of electricity for production in Indonesia is less competitive than Vietnam and Bangladesh.

Another important factor is that Indonesia's textile industry still relies on imported raw materials. In 2021, for example, Indonesia's cotton imports amounted to 1.86 billion US dollars, but its textile exports amounted to only 860 million US dollars. The recent international inflation and the devaluation of the Indonesian rupiah against the US dollar have led to an increase in the cost of imported raw materials for 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 in 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 41.53% year on year, while clothing exports fell 21.16%.

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

Recently, India's cotton exports have been greatly reduced because cotton farmers are reluctant to sell cotton. Indian industry officials said that despite the increase in Indian cotton production this year, Indian traders are now difficult to export cotton, because cotton farmers expect prices to rise in the next few months, so they delayed selling cotton. An Indian cotton exporter said that up to now, India has signed a contract to export 70,000 bales of cotton, compared with more than 500,000 bales in the same period last year. The trader said that unless Indian cotton prices fell or global cotton prices rose, exports were unlikely to gain momentum.

Pakistan - Textile exports will decline significantly

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

However, it may not take long for clothing exports to "surrender", at least this year's cotton imports from July to October look like this. According to customs data, Pakistan's cotton imports in July October this year just exceeded 1 million bales, the lowest level since September December 2019. If the current average monthly import of 250000 bales continues, the annual cotton import volume will not exceed 3 million bales, the lowest since fiscal year 2016. In 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 recover, but it is difficult for the annual import volume to reach the peak of 5 million bales in recent two years. From the current point of view, Pakistan's textile exports in fiscal year 2023 will inevitably decline significantly.

Bangladesh - clothing exports decline, and the stock of cotton mills keeps piling up

As clothing orders from international clothing retailers and brands decreased by 30%, the unsold yarn inventory of Bangladesh spinning mills is experiencing abnormal accumulation. 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 kg per day to nearly 5 million kg. Similarly, due to the sharp drop in consumer demand caused by the price rise, the yarn output of spinning mills facing the domestic market of Bangladesh has also declined significantly.

The spinning mills in Bangladesh 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 the production capacity. On the other hand, the inventory of unsold yarn has increased. The insiders said that if the spinning mill could operate at full capacity with sufficient natural gas supply, the yarn inventory would further increase.