"Although the previous year was characterised by cautious optimism , various indicators in 2019 point to several factors that could dampen global economic-growth prospects. Global growth has averaged above 2.5 per cent since the financial crisis but now there are signs of stability. After a long period of accommodative monetary policy, the US Federal Reserve and other central banks have begun to raise interest rates, increasing the cost of borrowing for many companies and consumers. "

Although the previous year was characterised by cautious optimism , various indicators in 2019 point to several factors that could dampen global economic-growth prospects. Global growth has averaged above 2.5 per cent since the financial crisis but now there are signs of stability. After a long period of accommodative monetary policy, the US Federal Reserve and other central banks have begun to raise interest rates, increasing the cost of borrowing for many companies and consumers. The European Central Bank is also planning to tighten its monetary policy in the coming months, increasing the chance that global economic growth could start to slow.

Slower growth predicted in developed markets

The International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the World Bank predict slower growth in developed markets in 2020, and a flattening of the growth curve in developing markets. And in 2019, there are signs that Europe, Latin America, and the Middle East could be most vulnerable to a deceleration. China and the United States could also face a slowdown, with fears of a potential bubble in the latter, and trade dynamics may affect consumer spending and fashion-sector growth in both. In a survey of more than 1,000 international executives and chief executives across industries published by McKinsey in December 2018, some 46 per cent expect global economic conditions to worsen, compared with 35 per cent in June 2018 and 15 per cent in December 2017.

They view economic conditions as a potential challenge, citing it as the third biggest trend for 2019 in the latest Business of Fashion-McKinsey ‘State of Fashion Survey’. Almost 42 per cent expect industry conditions to worsen in 2019. Excluding respondents from North America and the luxury segment, which are the main pockets of optimism, the majority of executives are even more pessimistic about the year ahead.

Rising investments lead to strong performance

The strong performance of global economy over recent years has been accompanied by rising investments by fashion-industry players. Around 68 per cent companies’ cost bases have risen over the past five years, while only 22 per cent have seen a decrease. Average selling, general, and administrative expenses (SG&A) were 36 per cent of sales in 2017, compared to 34 per cent in 2013, according to analysis from McKinsey’s Global Fashion Index. Priority investments in sales growth named for this year were omnichannel and e-commerce, developing customer-relationship-management capabilities, improving in-store experiences, and investing in brand building.

A strategic agenda to boost productivity

To offset the impact of slower growth and rising costs, companies need to set a strategic agenda to boost productivity over the coming period. Several companies have already taken steps, implementing cost-reduction and restructuring programs. As a result, SG&A ratios have become more fragmented, with leading companies seeing slower rate of cost increase than laggards.

Among companies to act are hosiery and bodywear specialist Wolford, which launched a restructuring program in late 2017; J. Crew, which said in 2017 it aimed to cut costs and rebrand; and H&M, which said in 2017 that it was aiming to reduce costs by 5 to 6 percent. More recently, in September 2018, Under Armour announced plans to continue to focus and drive productivity.

Looking at the year ahead, 17 per cent respondents to the BoF–McKinsey State of Fashion Survey said they would focus more on improving costs rather than growing sales. The main cost-improvement areas cited include reviewing organizational structure, diagnosing end-to-end efficiency opportunities, and reducing product-assortment complexity.

As the macroeconomic landscape shifts, companies will seek to protect themselves from slower growth by implementing “shock proofing” measures. These will primarily be aimed at boosting productivity through greater efficiency and cutting costs.

Vietnam’s revenues from textile and garment exports are expected to be up 14 per cent over the previous year. The escalating trade tensions between the United States and China have given Vietnam an opportunity to increase apparel exports to the United States. Garment exports from Vietnam to the United States in the first eleven months of ’18 were up nine per cent over the same period last year.

China, South Korea and Turkey account for 80 per cent of Vietnam’s total cotton yarn exports. Vietnam’s cotton imports are up 26 per cent. The country’s top five cotton suppliers are the United States, India, Brazil, Australia, and Cote d‘Ivoire. These countries make up 70 per cent to 80 per cent of the total cotton supply to Vietnam.

Vietnam’s cotton consumption continues to increase. Eighty per cent of cotton imported into Vietnam was spun into cotton yarn for export, while the rest was made into yarns of various types for domestic consumption. Vietnam’s cotton consumption is expected to rise 10 per cent due to recent developments in the textile and spinning sector. The textile and garment sector is one of the country’s top export industries, significantly contributing to the gross domestic product.

US denim apparel imports from around the world rose 3.12 per cent in January 2019 compared to a year earlier. Denim apparel imports from Vietnam increased 23.13 per cent in the month while denim apparel imports from China fell 1.9 per cent. Vietnam’s gains are generally seen as taking a bite out of China’s pie. More specialized manufacturing needed to make jeans compared to more basic apparel has companies taking a longer view of the risks of committing to China sourcing as trade tensions and cost increases hover above the country.

Jeans imports from Bangladesh fell 7.97 per cent. Pakistan’s shipments were down 20.3 per cent. US jeans imports from Cambodia decreased 13.46 per cent. But denim apparel imports from Indonesia rose 35.72 per cent. Sri Lanka’s shipments were up 8.15 per cent and imports from India rose 65.28 per cent. US jeans imports from Egypt rose 16.11 per cent. Jordan more than doubled its shipments on a year-to-year basis. Denim apparel imports from the western hemisphere increased 9.78 per cent in January. Imports from Mexico rose 11.52 per cent. In addition to Mexico, Nicaragua led the way with a 17.1 per cent gain and Guatemala nearly doubled its shipments from a year earlier.

As per the monthly report from the Commerce Department’s Office of Textiles & Apparel (OTEXA), US apparel imports from China increased by 8.5 per cent in January 2019, totaling $2.52 billion worth of goods. The January uptick came on the heels of US apparel imports from China increasing just 1.34 per cent in value in 2018 to $27.37 billion compared to 2017. It also came as companies rushed to get goods out of China before Lunar New Year on Feb. 2 and resultant factory shutdowns.

Among other Asian manufacturing havens, imports from Bangladesh rose 8.76 per cent in January compared to a year earlier to $535 million, India’s shipments increased 10.94 per cent to $382 million, and 8.31 per cent, or $232 million, more apparel arrived from Cambodia. Also posting smaller gains were Indonesia, with imports increasing 0.64 per cent to $408 million, and Pakistan, with a 1.92 per cent gain to $131 million.

Research collective Synflux has developed a system of digitised couture that reduces the amount of fabric needed to make clothes by creating garments that exactly fit the wearer’s body. Called Algorithimic Couture, the project involves 3D scanning a body to determine its exact proportions, which are used to create customised clothing. Synflux runs machine learning algorithms over the data collected to find the optimum garment pattern that reduces fabric waste to zero. The program then generates optimised fashion pattern modules comprised of 2D rectangles and straight lines. These 2D modules that make up the overall garment are then modeled using computer-aided design software to produce a fashion pattern for an item of clothing that is both comfortable and sustainable.

Synflux aims at disrupting the current system employed by the fashion industry, from design to factory production. It hopes that Algorithmic Couture will be widely implemented to reduce waste and energy in the fashion production industry more generally.

Synflux’s system also allows the user to customise the shape, fabric and color of the final garment to reflect their personal style. The garments are optimised to the user’s unique body shapes. Algorithmic Couture aims at revitalising how people fashion their own style through personalisation in the digital design process.

The Sustainable Apparel and Textiles Conference, to be held from April 09-10, 2019 in Amsterdam will address the most pressing issues relevant to the apparel industry. It will equip delegates with the best-practice and know-how relating to the biggest opportunities – and challenges - in transforming apparel supply chains.

With a focus on how consumer expectations are shaping sustainability in fashion, the conference will look at how brands can implement circularity in their supply chains, transform factories and ensure safe and equal treatment of workers. It will focus on circularity, transparent supply chains, fighting climate change in the sector, consumer trends and future of retail, disruptive innovation and technology, the Higgs Index, traceability, working conditions, living wage and women empowerment.

Florence fashion label Salvatore Ferragamo will unveil its S/S 2020 menswear collection at Pitti Uomo. The event will be held from June 11-14, 2019 in Florence. With this menswear-focused show, the Italian fashion house has changed the format of these events. Until now, it has shown its womenswear and menswear together in a single show organised in Milan. The company will capitalise on this new format under the creative direction of Paul Andrew to deliver its new definition of masculine luxury.

Clare Waight Keller, its artistic director, will present her exclusively male line on June 12, 2019

India may replace the Merchandise Export Incentive Scheme (MEIS) with the Rebate of State and Central Taxes and Levies (RoSCTL) scheme. The Merchandise Export Incentive Scheme has to be withdrawn as it is not World Trade Organisation-compliant.

Instead the Rebate of State and Central Taxes and Levies scheme may be extended to all textile products. This scheme offers rebates on all taxes at the central and state levels to exporters of apparel and made-ups. Exporters are reimbursed all un-remitted input taxes paid at the state and central levels. Also this scheme is acceptable globally and also provides a competitive edge to Indian exporters.

Under MEIS, the bulk of garments and textile exporters, incentives are given to exporters equivalent to about four per cent of their export value in the form of duty credit scrips that can be used to pay customs duties and are freely transferable. As it is a direct export subsidy, and the textile sector’s phase-out period for such subsidies ended in 2018, it would have to be withdrawn soon. India has moved above the threshold of per capita gross national income of 1000 dollars, which makes it ineligible to offer export sops to any sector.

India’s exports officially crossed the threshold limit of 3.25 per cent of world exports in 2010 and the eight-year phase-out period is over.

Bangladesh’s textile industry is known for its poor pollution control. Factories spew pollutants into local environs, disregarding their obligation for proper waste management. Considering the present level of release of untreated water into water bodies, it is estimated that every year from 2021 water bodies would receive 20,300 crore liters of untreated water. Such toxic industrial wastewater would threaten fisheries, biodiversity, and groundwater. Currently, textile industries use, on an average, 120 liters of water to dye and wash a kilogram of fabrics, and effluents are discharged into nearby rivers or wetlands without proper treatment.

Bangladesh has around 450 spinning mills, 1,200 weaving factories, and around 5,000 export-oriented dyeing and finishing factories. There are several thousand small dyeing and finishing factories catering to the needs of local markets as well. Only 1,376 textile factories have installed effluent treatment plants in their factories though Bangladesh has made effluent treatment plants mandatory for all plants in the textile industry and the leather industry.

Factories pumping out water for washing and dyeing fabrics have caused groundwater levels to drop in several apparel-industrial belts. Rivers and water bodies close to textile industrial zones are the major receivers of unprocessed effluents. Waste is dumped into rivers without being treated.

Pakistan’s fashion industry is hoping to catch the attention of western buyers. The country’s fashion designing and clothing industry has become an important dimension for the national economy because of its export potential.

Year after year, Pakistan’s fashion designers continue to show abroad, all over the world, in solo shows, collaborations and even fashion weeks. Some brands have made their way to the realms of international fashion. Pakistani products are appreciated for their value addition, like detailed handwork stitched into dresses and pants.

But it takes time to establish trust. The international market wants to see a collection season to season and there’s a six-month lead time to the buying. Sometimes it can be longer, especially in the beginning when building trust with new relationships. Buyers want to see young brands being consistent before they actually buy because they have to build their faith in the idea that the brand is a sound business and has not gone bankrupt after the first season. Pakistani products need to be repackaged and made relevant for the 21st century. Elements like a strong PR company that can steer designers in the right direction and a website with the correct pricing can maximize the impact of a brand showing internationally.