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On January 25, the United Nations released the “World Economic Situation and Prospects 2023” report, predicting that world economic growth in 2023 will drop from approximately 3% in 2022 to 1.9%.
In 2022, a series of severe mutual shocks, including the COVID-19 epidemic, the energy crisis caused by the war in Ukraine, soaring inflation, tightening debt, etc., will cause the world economy to suffer heavy losses. Against this background, the world economy will still be under pressure in 2023. The report also predicts that China’s economic growth will reach 4.8% in 2023, and China’s economic recovery will drive regional economic growth.
Optimistic expectations are rising, and upstream raw material prices are recovering
Entering 2023, as epidemic prevention and control has withdrawn from the historical stage, major cities have fully opened up, and economic operations are gradually returning to normal track. As the market gradually regains its vitality, the prosperity of the textile and apparel industry is expected to rebound steadily.
This can be verified from changes in upstream raw material prices.
Data source: National Cotton Market Monitoring System
As can be seen from the above figure, in 2022, domestic and foreign cotton prices suffered a cliff-like decline. The main ICE cotton futures contract fell to a minimum of about 70 cents/pound, while the main Zheng cotton contract fell to around 12,000 yuan/ton. It is rare to see such a huge drop in a short period of time. Starting from November 2022, cotton prices finally showed signs of stopping their decline and rebounding, with an increase of more than 2,000 yuan/ton.
On the eve of the Spring Festival, the latest data from the National Bureau of Statistics was released. China’s economic aggregate will exceed 120 trillion yuan in 2022, reaching a new level. The stock market and commodity market have generally risen, and the main price of Zheng cotton has climbed to a new high in more than four months. The market is full of expectations for the recovery of consumption in the domestic market in the post-epidemic era, and optimism has prevailed. Domestic cotton prices are expected to continue their upward trend after the holiday.
According to the Ministry of Commerce’s commercial big data monitoring, during the Spring Festival, the sales of key retail and catering enterprises across the country increased by 6.8% year-on-year. The sales of grain, oil, food, clothing, gold and silver jewelry, and automobiles of key retail enterprises monitored by the Ministry of Commerce increased by 9.0% and 6.0% year-on-year respectively. , 4.4% and 3.6%. Overcrowded scenic spots, restaurants, cinemas… all send signals of the strong return of my country’s consumption. If consumption continues to maintain a growth trend after the holiday, demand recovery in the domestic textile and apparel industry may be just around the corner.
The recession may be alleviated, and the second quarter will become an important turning point for the industry
Looking back on 2022, continued weakness on the demand side is the main reason for the slowdown in textile and apparel export growth. Developed countries such as the United States and Europe are trapped in a spiral of high inflation, which has significantly reduced the purchasing power of consumer goods such as textiles and clothing, causing textile and clothing exporting countries including China to face severe challenges. Therefore, as the United States and Europe are key areas for textile and apparel exports, any disturbance in their economic operations may trigger a “butterfly effect.”
According to the latest data, the U.S. Consumer Price Index (CPI) increased by 6.5% year-on-year in December 2022, narrowing 0.6 percentage points from the previous month. This is a consecutive increase after the U.S. inflation rate reached its peak (9.1% in June 2022). Lower in 6th month. After the release of this data, the view that U.S. inflation is slowing and inflation has peaked may once again be confirmed by the market.
The United Nations’ “World Economic Situation and Prospects 2023” report states that in 2022, the global inflation rate will be approximately 9%, a record high in decades. In 2023, global inflation is expected to ease and remain at 6.5%.
According to the International Monetary Fund’s forecast, China will become the biggest positive factor in the world economy in 2023, and the Chinese economy may rebound significantly starting from the second quarter.
From this point of view, as global inflation gradually eases, the consumer confidence index is expected to return to normal levels, providing favorable support for Asia, especially domestic textile demand. It is expected that the supply capacity of the textile and apparel industry will slowly recover around March, which coincides with the industry’s traditional peak season of “Gold, Three and Silver”. Therefore, after entering the second quarter, the turning points of the textile and apparel market will gradually appear.
Postscript:
With the continuous optimization of epidemic prevention and control policies and the promotion of national policies to expand domestic demand, the flow of people, logistics and business will flow again in 2023. By then, market vitality will gradually recover, and the “recovery” signal of the consumer market is constantly boosting the confidence of the textile and apparel industry. !
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