No good news for developed markets




SENSITIVE RISK for entreprises

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

  • Rise of the middle class in emerging markets remains an important driver
  • Demand for quality and innovation is likely to be supportive of margins for the most competitive actors and foster the arrival of newcomers
  • Rapid adaptability and efficiency of global supply chains
  • High sensitivity to consumer confidence, inflation and the cycle as a whole
  • Too high reliance on low cost of jobs
  • Insufficient progress with regard to ESG norms
  • The US-China opposition is likely to represent a persisting threat for globally integrated supply chains

What to Watch?

  • Smart wearables are expected to require strong investment with high impacts on profitability  
  • Newcomers such as Amazon are expected to increase competition and depress prices
  • Implementation of new norms (ESG) have the potential to be as disruptive as in the car industry

We expect the textile industry to be below trend in upcoming years as sales should decelerate close to 1.5% y/y in 2019 and slightly stabilize at 2% y/y in 2020, compared with an average growth of 3.5% between 2014 and 2018. Emerging markets should continue to experience stronger growth, thanks to structural factors such as the rise of the middle class, but also on the back of a conjunction of favorable cyclical factors, including a large stimulus in China, a context of declining inflation and supportive monetary policies.

In developed economies, trends recently observed will continue to play, albeit in a more accentuated manner.  Competition will be fiercer with a continuing penetration of the market by technology giants such as Amazon, implying loss of market shares for large brands still depending of physical stores. Major insolvencies will continue to be visible both in Europe and the US. New ways of consuming (based on the sharing economy or more awareness of governance, protection of the environment, social responsibilities) will induce further difficulties for the same large brands, which based their business model on the low cost of jobs and globally integrated supply chains. Protectionism will remain a threat against them even if we expect some attenuation of the global trade war in 2019.

Apparel:  Brands developing ESG strategies are likely to register strong growth but this trend is unlikely to impact the mass market very rapidly

Materials:  The cotton price rose by more than 25% in H1 18 but was flat across the year. Attenuation of protectionist threats in 2019 is expected to implement upward pressures on prices 

Key players

Country Role Sector risk

#1 producer

#1 exporter


Medium risk


#2 producer

#2 exporter


Medium risk


#4 producer

#5 exporter


Medium risk


#5 producer

#3 exporter

#2 importer


Medium risk


Contact Euler Hermes

Economic Research Team


Sector Risk Analyst

Alexis Garatti


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