The Economy Is In Recession And Demand Is Expected To Fall

Market environment analysis of textile industry from January to may in 2020

The global new coronavirus epidemic prevention and control situation continues to be grim, so far there is no obvious sign of improvement. The economic operation has been greatly impacted, the situation of enterprise bankruptcy and layoffs is increasing, and the unemployment rate of various countries is high. Even if the situation of epidemic prevention and control is improved in the later stage, the market consumption capacity can not recover rapidly with the economic restart and business environment reset. The situation of epidemic prevention and control and the time of economic restart in different countries are not synchronous, and the negative impact on the operation of global supply chain and economy will also last for a long time. In addition, the increase of international geopolitical conflicts and the deepening of the strategic game among major powers have brought greater uncertainty to the economic recovery. Looking forward to the second half of the year, the external situation faced by the textile industry is still grim, but the consumer market is partially good, and the recovery is still expected. At the same time, enterprises will strive to seek breakthrough ways in the plight, and will have more to do in product, technology and format innovation. The industry economy is still expected to show new bright spots under sustained pressure.

Chart: IMF and World Bank economic growth forecast for June 2020

　　 Source: IMF, World Bank

It will take time for the international market to improve significantly

As the impact of the epidemic on the economy is far greater than expected, the economies of all countries are in recession, and the authorities generally cut down the economic growth rate and consumption prospects. According to IMF, the global economy is experiencing an unprecedented crisis, and it is expected that the economy will decline by 4.9% in 2020, and there is still great uncertainty in the current forecast. According to the world bank, the global economy will decline by 5.2%. The developed economies will experience the most severe recession since World War II, while emerging markets and developing economies will face the first economic contraction in 60 years.

The world bank predicts that global per capita income will fall by 3.6%, and the number of economies with per capita income falling is the highest level since 1870. Brnier & Garnier is expected to further reduce the vitality of the global savings market by US $30.0 trillion, and brnier will further reduce the real value of investment in the global savings industry by 5%.

Among the main export markets of China's textile industry, the unemployment rate of EU and the United States continues to rise, especially the US stock market has fallen sharply for many times, the market is pessimistic and the consumption is seriously shrinking. A survey shows that nearly 60% of American consumers will not go to shopping malls. Whether the loose monetary policy can effectively stimulate the recovery of consumer demand remains to be seen. International brands generally take measures to stop loss by cancelling orders. For example, Nike cancels about 30% of orders before the end of the year holiday, while H & m only sells the spring stock with weak seasonality until autumn.

On the whole, even if the global epidemic situation shows signs of improvement in the second half of the year, the international market environment faced by China's textile industry is difficult to completely improve, and the export situation is still extremely grim. Anti epidemic materials such as masks are still the main force to support export growth. However, with the change of the situation of epidemic prevention and control, the possibility of gradual reduction of export volume in the second half of the year can not be ruled out, and the trend of export decline of textile industry may fluctuate in the second half of the year.

Domestic market demand is expected to gradually recover

At present, the overall situation of epidemic prevention and control in China is good, the order of life and production has been steadily restored, and the strong domestic market with a good foundation gives more leeway for economic development. With the vigorous promotion of the resumption of work, production, business and market, the decline of both the demand side and the supply side of China's economy has continued to narrow. For four consecutive months, the PMI of the manufacturing industry is above the boom and bust line. Due to the accelerated growth of business activities and new orders, Caixin China's service industry PMI has recorded the highest growth rate in more than a decade, and the enterprise's optimism has reached a new high in three years. In order to do a good job in the "six stabilities" work and implement the "six guarantees" task, the state has issued a series of policies to support enterprises to reduce their burdens and relieve their financial difficulties, and ensure the basic stability of consumption capacity by stabilizing employment and residents' income. In the forecasts of major international institutions, China is the only country with a positive economic growth rate in 2020. Both IMF and the World Bank forecast China's economic growth of 1% in 2020.

The stable recovery of the domestic demand market will provide the basic guarantee for the smooth recovery of the textile industry. At present, the steady recovery of China's market is obvious, and new marketing models such as unmanned retail and live delivery with goods are emerging, which helps to optimize the domestic consumption environment faced by the textile industry and broaden the retail channels. This year, China's new burden reduction scale for enterprises is expected to exceed 2.5 trillion yuan. The increase of monetary and credit support will help textile enterprises improve their business conditions.

Overall, it is expected that domestic demand sales in the textile industry will continue to improve in the second half of the year, and the decline in online and offline retail sales will be steadily narrowed. Among them, the growth rate of total online retail sales is expected to return to positive growth, but due to the large decline in retail sales in the first half of the year, the missed consumption season can not be made up, and the annual growth rate is expected to be low; affected by epidemic prevention and control factors, physical retail is expected to be difficult to keep up with the scale of last year.