The global economy is gradually recovering, but growth remains weak
According to the IMF's World Economic Outlook released on July 26, global economic growth is expected to slow from 3.5% in 2022 to 3.0% in 2023 and 2024. The economic slowdown is mainly concentrated in advanced economies, with growth falling from 2.7% in 2022 to 1.5% this year and remaining at a low level of 1.4% next year. Emerging market and developing economies are still expected to rebound, with growth accelerating from 3.1% in 2022 to 4.0% and 4.1% in the next two years. Global inflation is expected to fall from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024, but core inflation is expected to fall more slowly.
The US economy has outperformed expectations, with resilient employment supporting consumer spending
The US economy grew by 2.4% in the second quarter, higher than the 2.0% in the first quarter, significantly exceeding expectations. This is due to the resilience of the labor market supporting consumer spending, and businesses increasing equipment investment, reducing the risk of recession. Due to a high base effect, the year-on-year growth rate of the US CPI in June fell to 3%. In May, the US apparel store inventory-to-sales ratio was 2.4, an increase of 0.4% from the previous month. In June, US apparel store retail sales reached $25.88 billion, a 0.6% increase from the previous month, a 0.7% increase year-on-year, and a 16.8% increase compared to the same period in 2019. Data from Descartes, a US research firm, shows that the volume of seaborne container shipments from Asia to the US in June decreased by 13% year-on-year, a narrowing of the decline compared to the 20% decline in April and May. In terms of shipping regions, mainland China, accounting for nearly 60% of the share, decreased by 17% year-on-year, South Korea decreased by 11%, and Vietnam decreased by 6%, showing improvement compared to May.
Eurozone economic growth continues to slow
The IMF expects the Eurozone's economic growth to fall from 3.5% in 2022 to 0.9% in 2023, before recovering to 1.5% in 2024. The Eurozone's harmonized CPI rose by 5.5% year-on-year in June, while core harmonized CPI rose by 5.4% year-on-year. The latest data from Eurostat shows that EU retail sales fell by 3% year-on-year and 0.1% month-on-month in May. Non-food retail sales fell by 2.4% year-on-year.
Japanese retail sales have yet to recover to pre-pandemic levels
In May, the average monthly household consumption expenditure in Japan was 286,000 yen, a 4% decrease compared to the same period last year, marking a three-month decline. From January to May, Japan's textile and apparel retail sales totaled 3.5 trillion yen, a 1.1% year-on-year increase, but a 22.3% decrease compared to the same period before the pandemic. In May alone, Japan's textile and apparel retail sales were 741 billion yen, a 3.7% year-on-year decrease and a 22.8% decrease compared to the same period before the pandemic.
Overall, the pressure on clothing exports in the second half of this year remains considerable, but some favorable factors are gradually becoming clear. In terms of factors suppressing exports: Firstly, the international market economy is unlikely to improve, and demand has not yet improved significantly. The IMF predicts that the economic growth rate of about 93% of developed economies will slow down in 2023. Secondly, the global supply chain continues to adjust, and developed countries are reducing procurement from China, making it difficult for us to maintain our existing market share.
In terms of boosting factors: Firstly, the Chinese government's policies continue to exert efforts, with numerous new trade regulations implemented and some trade agreements coming into effect, jointly promoting the stabilization of exports. Secondly, international flights are gradually resuming, and cross-border personnel movement will promote the smooth progress of exhibitions this year, driving the recovery of new orders. Thirdly, after the gradual digestion of overseas inventories, the demand for overseas replenishment is rising, which will drive the release of new orders this year. Fourthly, the base of exports in the second half of last year is lower compared to the first half (exports in the first half of 2022 increased by 12% year-on-year, while exports in the second half decreased by 3.1% year-on-year), and the low base effect will have a certain upward effect on the export growth rate in the second half of the year. Fifthly, although exports to traditional markets face many difficulties, exports to emerging markets are growing rapidly, making the structure of clothing export markets more diversified, which will have a positive driving effect on clothing exports in the future. Sixthly, the RMB exchange rate is expected to stabilize in the second half of the year. Seventhly, multiple negative factors that led to the decline in exports in the second half of last year have begun to subside this year, such as transportation costs and shipping congestion, which are no longer hindering factors for orders in 2023.
In the future, the clothing export industry needs to improve product added value, promote a steady increase in the share of high value-added products, and at the same time strive to slow down the decline in the share of mid-to-low-end products. On the one hand, we need to strive to stabilize the market share in traditional markets, and on the other hand, we need to implement a market diversification strategy to avoid the risks arising from over-reliance on developed countries or a single market.
With the support of the national policy to stabilize foreign trade, China's clothing export industry will actively leverage the advantages of the entire industrial chain, exert efforts from both the supply and demand sides, enhance core competitiveness, strengthen the innovative momentum of foreign trade, and promote win-win cooperation and high-quality development of the international textile and apparel supply chain.
