Apparel and Footwear: Half-Year Update

June 2023

Global economic growth is forecast to slow in 2023, as businesses and consumers remain constrained by the adverse combination of persistent inflation and high interest rates. This will impact sales for the fashion industry, as consumers are generally expected to be more cautious in their discretionary spending. A slowdown is expected in the Eurozone and UK where inflationary pressures remain high and monetary policies tight, while growth prospects remain strong in emerging economies.

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Key findings: Uneven global recovery

The global outlook sees slight improvement amid slowdown in 2023

The global economy is expected to slow significantly in 2023, with global real GDP growth forecast at 2.5%. This constitutes low growth by historical standards, resulting from persistent inflation and rising interest rates, affecting businesses and consumers globally. Nevertheless, the global economic outlook has improved slightly in both advanced and emerging economies, amid high resilience and China’s recovery. Nonetheless, uncertainty remains unusually high, due to a multitude of risks and headwinds, which keeps the likelihood of a downside scenario for the global economy in 2023 elevated.

High inflation and rising interest rates weigh on growth in the UK, US and Eurozone

The US and Eurozone will record only low real GDP growth in 2023, even if both economies have surprised to the upside in the first half of 2023, with labour markets remaining tight and consumer spending still resilient. However, persistent inflation beyond food and energy, as well as steadily rising interest rates, will weigh on growth in the US and Eurozone in 2023. In these markets, economic growth in 2023 and 2024 will remain relatively subdued, amid inflationary pressures and high interest rates, impacting consumers’ ability to spend on apparel and footwear.

Emerging markets continue to surge and provide new areas for growth

The global economy will see a considerable discrepancy in growth between advanced and emerging economies in the near future. Despite headwinds, economies in emerging markets in Asia Pacific, including India and Indonesia, as well as in Latin America, continue to surge and provide new areas for growth for apparel and footwear players. China’s faster than expected rebound following its post-zero-COVID reopening has already provided international fashion players with a boost, and is set to support global growth in the industry.

Key findings: Uneven global recovery
Overall, apparel and footwear’s sales forecasts see mild growth downgrade
Upgrades or downgrades vs annual research for all 16 markets in scope
Global inflation moderates only gradually as price pressures show signs of persistence
The many drivers of inflation within apparel and footwear
Raw materials and transport costs are the highest concerns among industry players
Select commodity prices show increased raw material costs for textile industry since 2020
Consumers expected to focus more on essential purchases
Company news: Primark’s sales on the rise, but inflation and weak Sterling shrink its profits
Company news: “Dollar shop” marketplace Temu is thriving in inflation-weary US market
Company news: Western luxury houses bank on China’s reopening to boost global growth
US: Resilient consumer spending mitigates recession risks in early 2023
Minor dip in US apparel and footwear consumption in 2023 followed by resilient growth
Brazil: Conflicting monetary and fiscal policies fuel uncertainty and hamper economic growth
Apparel and Footwear in Brazil to post healthy growth, but lower than initially expected
Mexico: Outlook improves slightly as consumer spending and manufacturing rebound
Stronger growth in an already optimistic scenario for apparel and footwear in Mexico
China: Rebound in private consumption and surging investment to support economic growth
China’s brighter post-COVID-19 economic outlook boosts short-term fashion sales
Indonesia: Economic growth to ease amid weaker export growth
Indonesian fashion market sees reduced short-term growth but remains strong and dynamic
India: Economic growth to ease, but will remain one of the strongest economies globally
Growth in India’s fashion market stays on track, backed by strong local consumption
Japan: Weak foreign demand and high inflation are key downside risks
Return to pre-pandemic routines behind rebound in fashion sales in 2023 in Japan
Eurozone: Impact of persistent inflationary pressures weigh on economic outlook
France and Spain show mild revisions
Germany and Italy see more significant short-term downgrades
UK: Outlook clouded by persistent inflation, high interest rates and weak external prospects
Short-term negative economic outlook hampers UK apparel and footwear growth in 2023
Key findings: Inflation and uncertainty drive diversification in retail and source markets
Real GDP annual growth forecasts and revisions Q2 2023 vs Q4 2022
Real GDP annual growth forecasts and revisions Q2 2023 vs Q4 2022
Inflation forecasts and revisions Q2 2023 vs Q4 2022
About the Apparel and Footwear Half-Year Update Dashboard

Apparel and Footwear

Apparel is the aggregation of clothing and footwear. This dataset covers retail sales of apparel through both store-based retailers and non-store retailers. Excludes black market sales (i.e. untaxed, generated within informal retailing)and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded.

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