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US debt crisis to impact textiles & apparel sector next year
Aug '11
The recent downgrading of the US sovereign credit rating from AAA to AA+ by Standard & Poor has not immediately impacted the textiles and clothing sector.

But, economists opine that the US Government will try to reduce its budget deficit by taking recourse to increasing its revenue by raising taxes. This will decrease the disposable incomes of the consumers, which, in turn, will affect their spending on clothing items.

During the global financial crisis of 2008 too, the impact on textiles and apparel market was not high at the beginning. Later on, however, as unemployment increased and incomes tightened, consumers became unwilling to spend a great deal on apparel items. This led to a decline in export orders and several textile producers in China made heavy losses owing to fewer sales. The declining trend halted only in the later half of 2009.

The orders for current exports to the US market were placed at the beginning of 2011, and hence they do not show any influence of the downgraded credit rating. However, Chinese textiles and apparel export companies are not optimistic about the future trend of the US market.

Experts opine the situation may take a similar turn like that of 2008. Since economic crisis does not immediately impact the consumer market, they expect the negative impact of the present US debt crisis to surface next year.

Fibre2fashion News Desk - China

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