International trade

Euro area exports of goods to the rest of the world in June 2024 amounted to €236.7 billion ($250.09 billion), marking a 6.3 per cent decrease compared to June 2023, when exports were €252.5 billion. Imports, meanwhile, fell by 8.6 per cent to €214.3 billion ($226.42 billion), down from €234.5 billion in June 2023. This decrease in both exports and imports widened euro area’s trade surplus to €22.3 billion (approximately $24.7 billion), up from €18 billion in June 2023. For the first half (H1) of 2024 (January to June), the euro area recorded a substantial trade surplus of €107.5 billion, a sharp contrast to the €3 billion deficit recorded during the same period in 2023.

Similarly, the EU posted a trade surplus of €20.9 billion (approximately $23.15 billion) in June 2024, compared to a surplus of €18.6 billion in June 2023. From May to June 2024, the EU also experienced an improvement in its trade balance, with the surplus increasing from €10.2 billion to €20.9 billion.

Retail trade

EU retail trade saw a modest growth in July 2024. The seasonally adjusted retail trade volume rose 0.1 per cent in the euro area and 0.2 per cent in the EU, when compared to June 2024 in which trade declined 0.4 per cent. On annual basis, the euro area decreased 0.1 per cent in retail sales while EU increased 0.4 per cent, compared to July 2023. Among members, monthly retail trade volumes grew in Croatia (up 2.9 per cent), Austria (up 1.8 per cent) and Slovakia (also up 1.8 per cent). Meanwhile, retail activity in Luxembourg fell 2.1 per cent, and in Romania and Cyprus it decreased 1.8 per cent and 1.1 per cent, respectively. On yearly comparison, Luxembourg recorded the highest growth in retail trade volume at 10.3 per cent and was followed by Croatia (up 7.9 per cent) and Bulgaria (up 6.8 per cent). On same comparison, Belgium was down by 4.4 per cent, Estonia dropped 3.1 per cent and Finland declined 2.1 per cent.

Used textile crisis

Reports indicate that Europe’s textile sorting and recycling industry grappled with a severe crisis that stemmed from the war in Ukraine, logistical challenges in Africa and the rise of ultra-fast fashion. As a result, there is now an oversupply of used textiles with a sharp decline in demand from traditional export markets. Notably, the volume of used textiles traded between the EU and non-EU countries decreased from 464,993 tonnes in 2022 to 430,185 tonnes in 2023. This oversupply has reportedly caused a significant drop in prices for second-hand textiles, while the costs associated with collection, sorting, and recycling have surged. Since spring 2024 the prices for sorted garments are no longer covering processing costs, leading to financial strain for sorting operators who now face major cash flow problems. This has called for VAT reductions on textile repair, reuse, and recycling activities within the existing VAT Directive framework, and the introduction of a tax on new petroleum-based materials to “incentivise” the use of recycled textiles and reduce reliance on virgin materials.

CIRFS recommendations

The European Man-made Fibres Association (CIRFS) made several recommendations to the EU Parliament and Commission as well as member states for promoting sustainable textiles in Europe, while enhancing the competitiveness of the value chain and safeguarding the remaining industrial base. The industry body urged them to take swift action to reduce energy and electricity costs, use revenues from the EU Emissions Trading Systems (ETS) to assist the transition to carbon-neutral industries and establish a single market for waste and recycling in Europe. CIRFS emphasised on the urgency regarding the investment and government spending to safeguard the EU’s competitiveness and promote innovation. Addressing the concerns about the negative impact of rising energy costs, CIRFS urged the incoming Parliament and Commission to create a unified EU market not only for pricing but for grid infrastructure too. It recommended fast-track implementation of Carbon Contracts for Difference (CCfD). Furthermore, it recommended to delay the reduction of free ETS allowances if the implementation of the EU Carbon Border Adjustment Mechanism (CBAM) is found ineffective, and to prioritise the addressing of downstream carbon leakage risks and developing an effective export support solution to protect European value chains. Additionally, the bureaucratic barriers must be systematically removed, and responsibilities among all stakeholders in the value chain must be clearly defined. The EU must also ensure that environmental regulations be applied equally to imported products. To ensure circularity within the EU, effective ex-ante controls to verify compliance must be in place, and to encourage greater recyclability, the unification of end-of-life disposal costs across different regions and EU member states must be actioned. CIRFS also recommended using TDIs to address economically irrational and non-market excess capacities, abolishing the outdated lesser-duty rule, and better integrating social and environmental standards into trade defence rules. The EU was reminded of implementing border measures, similar to those employed by the United States and Canada, to ensure a level-playing field and safeguard the interests of European industry.

FRANCE

IMF projected France’s growth of 1.3 per cent in 2025, following 0.9 per cent in 2024. The headline inflation in L’Hexagone nation is also expected to descend and reach 2.3 per cent, and return to target in the first half of 2025. At the same time, UN’s financial agency cautioned that political fragmentation and policy uncertainty domestically could delay fiscal consolidation and reform efforts, weighing on confidence and public finances. The escalating geopolitical tensions and an abrupt global slowdown in key trading partners could be the major external factors to impact the IMF projection. However, faster reform momentum in France and at the EU level could mitigate these risks.

In June, the Consumer Price Index in France rose marginally at 0.1 per cent month-on-month, following a period of no change in May 2024. The prices of clothing and footwear, however, increased 0.4 per cent, m-o-m. Almost flat growth in overall prices was primarily driven by a 0.1 per cent rise in manufactured product prices, which was offset by a 0.8 per cent fall in energy prices following a 1.2 per cent decrease in May. From June 2023, the consumer prices were up by 2.2 per cent, slightly down from the 2.3 per cent increase in May. Meanwhile, the prices of clothing and footwear maintained their growth rate of 0.6 per cent y-o-y, remaining unchanged from May. Core inflation, excluding volatile items such as energy and food, saw a slight increase and reached 1.8 per cent in June 2024, up from 1.7 per cent in May. Meanwhile, the harmonised index of consumer prices (HICP), used for European comparisons, increased 0.2 per cent m-o-m in June, following a 0.1 per cent increase in May. On a y-o-y basis, the HICP went up 2.5 per cent in June, slightly lower than the 2.6 per cent rise recorded in May.

Between January and April, France imported apparel worth $280.5 million from Cambodia, which accounted for 3.71 per cent of country’s total garment imports ($7.555 billion). This figure, however, remained lower than $290.609 million during the same period last year. Like last year, Cambodia ranked as the France’s 9th largest apparel supplier during the 4-month period in 2024 too. Last year, Cambodia’s import, valued at $8.008 billion, contributed 3.63 per cent of France’s total apparel imports. Except in 2022, when Cambodia ranked as the 8th largest supplier to France, the Asian country has consistently maintained its 9th rank since 2019.

GERMANY

Germany’s trade growth remained almost flat amidst shortage of orders in 2024. At the same time, domestic fashion market flourished, and the government introduced new guidelines for sustainable textile procurement.

H1, 2024 trade

Germany exported industrial textiles worth $1,397.648 million in the first half (January to June) of 2024. This was lower than the exports during the corresponding period of the previous year ($1,424.278 million) but higher than the shipments in the second half of last year ($1,279.046 million). Germany’s imports of industrial textiles were recorded at $642.967 million in the first half of 2024, which was lower than the imports of $718.788 million in H1 2023 but higher than the imports of $613.831 million in H2 2023.

The US was the top destination for Germany’s exports of industrial textiles during the period, with exports to the US, valued at $107.575 million, accounting for a 7.70 per cent share in Germany’s total industrial textile exports. Following the US, top four export destinations were Poland at $97.599 million (6.99 per cent), Italy $80.398 million (5.76 per cent), China $72.474 million (5.19 per cent), and France $71.341 million (5.11 per cent).

China remained the biggest supplier for Germany’s industrial textiles, with imports from China, valued at $72.678 million, representing 11.30 per cent of total imports over six-month period. Imports from Poland were recorded at $60.258 million (9.37 per cent), Switzerland at $59.791 million (9.30 per cent), Italy at $57.985 million (9.02 per cent), and Luxembourg at $51.301 million (7.98 per cent).

Dwindling orders

Germany's economic landscape was under significant pressure, as the shortage of orders continued to escalate. In October, 41.5 per cent of German companies reported experiencing a lack of orders, an increase from the 39.4 per cent which was recorded in the month of July – the most severe level since the 2009 financial crisis. In manufacturing sector, 47.7 per cent of all companies reported a lack of orders. This number for textile manufacturers stood even higher at 57.7 per cent. Less affected sectors included manufacturing of wearing apparel at 26.2 per cent.

New guidelines

The Federal Ministry for Economic Cooperation and Development (BMZ) introduced updated guidelines for sustainable textile procurement on May 21, 2024. The new guidelines emphasised ecological and social criteria for public textile purchases. They aim to set a global standard for responsible procurement across various public sectors and also to enhance responsible purchasing practices. In addition, they are also meant to ensure production of textiles without child labour or environmental damage. The guidelines are intended for use by all federal authorities and administrations. The updated guidelines offer practical advice on embedding human rights due diligence in public procurement, mirroring requirements in the private sector under Germany’s Supply Chain Act. The guidelines also have stricter ecological requirements which will benefit predominantly the female workforce in the textile industry. The German government is committed to procure at least 50 per cent of all textiles according to these guidelines by 2026.

ITALY

In 2024, the country experienced low orders for its textile machinery from the foreign markets, as well as a vulnerable trend in exports of textile and apparel.

Weak textile machinery orders

The order index for Italian textile machinery in the first quarter (January to March) remained stationary compared to the same period of the previous year. In value terms, the index came in at 61.2 points compared to base year 2021, with index score being 100. While domestic orders were up 15 per cent compared to the Q1, 2023, the foreign orders fell 4 per cent. In value terms, the index on foreign markets came in at 59.4 points, in comparison to a 73.9 points in Italy. During this quarter, the order backlog reached 4 months of assured production.

It was the second quarter (April-June) of 2024 which saw a 17 per cent drop in the order index of Italian textile machinery, that meant 49.8 points on index. This was caused by a 22 per cent decrease in demand in foreign markets, excluding China and Egypt, which represent 86 per cent of total orders. During the period, the order backlog reached 4.3 months of assured production. Additionally, ACIMIT’s (Association of Italian Textile Machinery Manufacturers) survey showed that in the first six months of 2024 the utilisation rate of production capacity by Italian manufacturers was 61 per cent, which was expected to rise to 64 per cent in the second half of 2024.

Further, the order index for Italian textile machinery continued showing a decline at 19 per cent in Q3, 2024 (July to September) too, compared to the same period last year, standing at 50.6 points on index. This time the drop was attributed to a 23 per cent decrease in foreign markets. Investments in machinery remained stalled in some of the major markets such as India, Türkiye, and Bangladesh. Facing the weak demand in several key markets, Italian manufacturers began working to seek new opportunities in countries like Turkmenistan and Kyrgyzstan, where the textile industry is still technologically underdeveloped.

Textile & apparel downturn

Starting in late 2023, the Italian textile and apparel industry had a persistent and worsening downturn as reflected by nearly 75 per cent of businesses reporting lower revenues by the mid of 2024, with a quarter seeing drops of at least 20 per cent. A survey (by SMI) found that economic uncertainty, high interest rates, inflation, and increasing energy costs diminished the consumer purchasing power, with situation further compounded by geopolitical tensions, causing major concern for the Italian fashion industry. SMI predicted an average sales decline of 5.8 per cent in H1, 2024 compared to the same period in 2023, with no foreseeable improvement in H2, 2024 either. The survey was conducted in early July among small and medium-sized enterprises (SMEs) across various regions. SMI further forecasts a 6.2 per cent decrease in revenue for the textile and clothing sector in the first nine months of 2024.

Textile export in July

In July 2024, Italian textile exports declined marginally at 0.5 per cent compared to the previous month, totalling to €1.95 billion ($2.06 billion). Despite this short-term dip, the sector saw a significant y-o-y increase of 6.8 per cent from July 2023, when exports were valued at €1.83 billion ($1.93 billion). The slower demand in key international markets and seasonal fluctuations in export activity were said to have caused this drop. Key markets for Italian exports include the EU, the largest destination, accounting for approximately 60 per cent of total exports; while the US, with a significant portion, witnessed a notable increase in the demand for luxury and designer textiles.

THE NETHERLANDS

Talking of its textile industry, the Netherlands imported apparel worth $7.087 billion and exported apparel worth $5.569 billion between January and May 2024. Mainly importing apparel from the non-European countries and exporting to European countries, the Netherlands stood as the third-largest apparel exporter in Europe. However, both exports and imports during the period saw a decline compared to same five-month period of 2023. While the apparel exports fell by 13.6 per cent from $6.446 billion (2023), the decline in imports was 5.72 per cent (2023: $7.517 billion). Germany, accounting for 29.91 per cent share, was the leading destination for Dutch apparel exports during the period, followed by France (13.03 per cent share at $725.629 million), Italy (9.37 per cent at $522.027 million), Spain (7.25 per cent at $403.536 million) and Poland (7.2 per cent at $400.785 million). During the same five-month period, China remained the top apparel supplier to the Netherlands with a share of 17.98 per cent, valued at $1.274 billion, out of total apparel imports. Other major suppliers were Germany ($1.043 billion with 14.72 per cent share), Bangladesh ($945.476 million, 13.34 per cent share), Türkiye ($677.325 million, 9.56 per cent share), and Vietnam ($374.239 million, 5.28 per cent share).

Compared to July 2023, the total volume of exports of Dutch goods saw an increase of 2.2 per cent in July 2024, reported Statistics Netherlands (CBS) in September. The imports nevertheless encountered a slight drop of 0.7 per cent in the volume of imported goods compared to same month last year. CBS Exports Radar further pointed to a more challenging outlook for exports in September. Conditions began worsening from July, primarily due to declining optimism among European manufacturers about foreign orders. In particular, confidence among German manufacturers took a downturn, contributing to the increasingly negative export environment, as per the CBS.

SPAIN

The Spanish Association for the Management of Textile Waste, Spanish Federation of Municipalities and Provinces (FEMP) and few of the biggest fashion brands, such as Zara owner Inditex, H&M, Mango, Decathlon, IKEA and Primark, will participate in a trial that will separate textiles and shoes from other waste collection so that they can be reused or recycled, under the project named Re-viste. The collection of discarded clothes will start from April 2025, as part of a voluntary pilot scheme to manage textile waste that anticipates implementation of the EU’s Collective System of Extended Producer Responsibility (EPR) for textiles and footwear (SCRAP) regulation expected to come into force in 2026. Six Spanish towns with a combined population of over 300,000 people, encompassing urban, semi-urban, and rural areas, will evaluate various gathering techniques that will include street containers, public cleaning stations, and private areas like stores and educational institutions. The trial will run for a year as authorities will give companies at least a year to adapt before EU regulation comes into force. The rules will mean that companies that sell more clothes and shoes are likely to have to pay more for managing the waste. The official data says that 88 per cent of used clothes end up in landfill in Spain, with each resident discarding 20 kg of clothes per year – 5 kg more that the Europe’s average. Once the legislation comes into force, fashion companies estimate that Spain will need one textile waste container for every 1,200 residents. As of 2024, Spain is waiting for the final approval of new EU regulation before it issues rules to fashion companies. The purpose of sorting non-reusable clothing by material for recycling is to turn it into new textiles. The FEMP Textile Waste Working Group and Re-viste will form the monitoring committee, which will keep an eye on the system’s proper implementation.

Spain’s textile industry contributes 3 per cent to the country’s GDP.

Fibre2Fashion News Desk (SB - WE)