41% of global companies optimistic about biz situation: ITMF Survey

The two positive ‘shocks’ explaining the expectations upswing in January 2022, i.e., a much better energy situation than expected (especially in Europe) and additional global growth impulse from China’s sudden ending of its zero-COVID-policy, have not (yet) translated into real gains and ease of business for most producers. The additional increase in optimism recorded in March 2023 stands in strong contrast to the current continued deterioration of the current business situation, according to the 19th ITMF Global Textile Industry Survey (GTIS).

Nevertheless, the persistent optimism about the mid-term future signals that many companies are still of the opinion that business should improve in the second half of 2023. Whether companies think that the situation cannot get much worse and therefore are hoping for a better business environment or whether they are anticipating a well-founded normalisation of business activities remains to be seen.

After a period of boom and bust in 2021-2022 a normalisation can be expected. Inventories along the supply chain have been coming down closer levels deems ‘normal’ in recent months. With inflation rates coming down—albeit slower than hoped—consumers should feel more comfortable, especially given the fact that unemployment rates are and remain very low in many important consumer markets. Of course, the very fast rise of interest rates caused problems for consumers and manufacturers alike. But higher interest rates could also be seen as one part of a more normal business environment as well.

The indicator for business expectations is positive in all regions. It was negative in the three Asian sub-regions and Europe (including Turkiye) for a very long time but has now broken into positive territory in all these places.

North and Central America recorded a level close to 0 pp for at least six months. This is not coming as a surprise as the business situation in this region was very good since the start of the GTIS in May 2021. Hence, it is normal that companies do not expect an even better business environment.

South America (i.e., mainly represented by Brazil) has always been the most optimistic region in this survey. This indicator for business expectations has nevertheless decreased a little but is still expected to be favourable in September 2023. The sentiment across segments is very similar. They have all recorded a strong and sustained increase in optimism in the last few months, except weavers/knitters. Companies in this segment reported improved expectations on average but the share of weavers/knitters anticipating the situation to be less favourable by September 2023 is still greater than those that are optimistic about it.

Fibre2Fashion News Desk (NB)