US Debt Crisis Triggers Global Textile Trade Alert

The recovery trend of the international textile and clothing consumer market has not been stable yet.

Credit downgrade has far-reaching consequences.

In August 5th, the international credit rating agency Standard & Poor's announced that the US sovereign credit rating was downgraded from AAA to AA+. This is the first time that credit rating has been "downgraded" in the history of the US credit rating.

The move triggered a wave of waves, causing sharp fluctuations in the market.

Economists point out that even rigid consumer goods such as textiles and clothing will not be able to be independent in the future.

In order to reduce the deficit, the US government will increase taxes, and the disposable income of consumers will be reduced, and consumer goods, including clothing, will be affected.

Recall that in 2008, the global financial crisis made the global textile and clothing consumption market bottomed out.

The increase in unemployment and tight income make consumers reluctant to spend too much money on clothing products.

Many textile manufacturers have suffered huge losses due to poor product sales.

And the adverse effects of the debt crisis have already appeared on the unemployment rate.

The labor department said in August 3rd that the unemployment rate in the United States increased to 9.2% in June.

Analysts believe that even if the US government does not act on taxes, the rising unemployment rate will lead to consumer spending cuts, and the domestic consumer market will shrink.

More far-reaching impact is that in order to solve the problem of unemployment, the United States is likely to reduce imports and expand exports as the main mode of economic growth in the second half of this year.

If the United States implements its export strategy to suppress imports, it will inevitably lead to a further rise in US trade protectionism and intensify international trade frictions.

"Increasing imports means reducing employment opportunities in our country.

In the case of economic slowdown, this is something the US government would not like to see.

Therefore, in order to suppress imports from other countries, international trade frictions will become more frequent.

An economist predicted this.

Faced with the possible negative impact of the US debt crisis, the major textile and apparel exporting countries with close ties have expressed concern.

Related practitioners pointed out that in the coming period, the US market is likely to reduce imports because of the downturn in consumption, and the expectation of the depreciation of the dollar will further occupy the profit margins of export textile and clothing.

Diola, President of the India export organization Federation (FIEO), said: "the decline in the US credit rating will have many effects on India's economy, which is not good news for India exporters."

Diola pointed out that the downturn in the US economy and the debt crisis in the eurozone will lead to a decrease in demand in the US and Europe, which will affect India's export orders, especially clothing, handicrafts and leather products.

"In the three quarter and fourth quarter of this year, the negative impact of the US debt crisis on these export products may appear."

Diola said worried.

In addition to the drop in demand, Diola is also worried about the change in the India rupee exchange rate against the US dollar.

"The India rupee appreciation expectation will weaken the competitive advantage of India manufacturers.

Moreover, the low price of imported goods is likely to put pressure on the domestic manufacturing sector in India. "

Diola said.

Yes

Pakistan analysts expect that the US debt crisis will not have much impact on Pakistan's textile exports, but rising costs will make it difficult for manufacturers to gain competitive advantage in a sluggish US market.

Affected by cotton price fluctuations and energy crisis, Pakistan textile industry has increased its operating burden this year.

Compared with the previous year, the manufacturing cost of Pakistan's textile industry has increased by more than US $1 billion.

The industry is generally worried that garment exports in Pakistan will continue to decline this year.

There is no obvious fluctuation in consumer market.

Despite the fact that manufacturers of textiles and clothing exports are worried, the US consumer market is still stable.

The latest statistics show that US retail sales increased by 0.5% in July.

Compared with June, it also increased by 0.2 percentage points.

Rudy Narvas, New York's Industrial Bank, said: "US retail sales account for 2/3 of US economic activity.

The economic statistics are numerous and complicated.

But we can see that the retail industry has been doing well since March of this year.

Even in the past July, the consumption gear that pushed us economic growth has not stopped.

On the other hand, some export enterprises in China also say that orders from the US market have not yet been strongly affected.

The company's current orders were basically determined at the beginning of the year, and the order volume was also ranked in October, but the trend towards the US market was not optimistic.

"It may be like the financial crisis of 2008, which did not feel too great at the beginning, but then the order has been sliding down until the second half of 2009.

So, next year's orders need early planning. "

Guangdong textile export enterprise responsible person said.

Economic turbulence in the consumer market often requires a longer cycle, and economists estimate that the negative impact of the debt crisis in the US is likely to emerge next year.

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Paul Dales, an economist at the capital economics consultancy, predicts that the fall in the stock market will lead to a reduction of US $140 billion in US consumer spending next year (equivalent to a decline of 1.3%) and a half percentage point reduction in the annual growth rate of the economy.

Some analysts pointed out that the turmoil in the stock market brought the greatest impact on the wealthy.

"80% of the stock is held by 10% of the richest people in the society, while the 20% of the richest people in the society account for 40% of the national consumption expenditure."

Mike Neemia, chief economist of the International Shopping Center Association.

It is worth noting that the luxury retail industry in the United States will face unprecedented challenges in the future.

All along, the most solid foundation for the growth of the luxury industry is the richest group in the society. Now, luxury goods retailers Tiffany and Fifth Avenue Sax department store are finding business more and more deserted.

Kelly Chalk, a tourist on holiday in Las Vegas, said: "we did tighten our budget this time.

This is not the same as it used to be. We never used to worry about how much we used to spend when we played.