COVID to disrupt global textile supply chain: EURATEX

COVID to disrupt global textile supply chain: EURATEX

While India's textile & clothing (T&C) exports to European Union (EU-27) declined by 20.8% in 2020 compared to 2019, exports of China to EU-27 increased by whooping 46.9%

Brussels, April 12, 2021

On the occasion of releasing its Quarterly Economic Update, the European Apparel and
Textile Confederation (EURATEX) has raised a concern that the COVID 19 crisis may soon
be followed by disruptions in the global supply chains, affecting the competitiveness of the
textile & clothing (T&C) industry in the European Union (EU).

Economic data up to December 2020 reflect a dramatic contraction in demand and production
of textile and clothing items, caused by the COVID 19 pandemic. Over the full year 2020, the
EU turnover fell by -9.3% in textiles and by -17.7% in clothing, compared with 2019. The
crisis was particularly felt in the middle of the year (with production losses over 50%).

Towards the last quarter of 2020, business activity recovered in the textile industry (+1.6% as
compared with the previous quarter), while it further deteriorated in the clothing sector (-
6.8%), as a result of the decline in consumption expenditure and the slowdown in non-
essential activities.

Looking at trade performance, T&C extra-EU exports slipped back by -13.6% in 2020. The
majority of EU top-10 customers experienced a steep decline in 2020. EU imports increased
by +5.5% in 2020. However, this increase was mostly due to the import of personal
protective equipment (including facemasks), especially from China (increase from Euro 1
billion in 2019 to Euro 20 billion in 2020). Meanwhile, India’s textile & clothing (T&C)
exports to European Union (EU-27) declined by 20.8% in 2020 compared to 2019.

Looking forward, the EU Business Confidence indicator of March 2021 gained momentum,
with a confirmed upward trend in the textile industry (+3.8 points), and a modest recovery in
the clothing industry (+1.6 points). Also, the employment expectations indicator saw a robust
increase.

However, these signs of recovery are jeopardised by recent turmoil in the T&C supply chain.
Raising prices of raw materials (textile fibres, dyestuffs, etc) and transport costs, negative
impact of CO2 prices and political turmoil in some important sourcing countries (China,
Myanmar) create uncertainty, adding to the challenges of the corona pandemic.

On that basis, 2021 will be a critical year for the competitiveness of the European T&C
industry. A forward-looking EU textiles strategy, which offers the right policy mix and
support instruments for our SMEs, is essential in this context.

Dirk Vantyghem, Director General, EURATEX, commented, “European textiles and apparel
companies have shown great resilience and flexibility during this pandemic, but continue to
face global challenges. Now is the time to design a modern framework to support these
companies in their transition process. We need to focus on promoting innovation, offering
support towards digitalisation, creating robust supply chains and ensure a level playing field.”
The EU Textiles strategy is expected for the 3rd quarter of 2021; while it is expected to put a
strong focus on sustainability and circularity, EURATEX insists the strategy should take a
broader perspective and ensure long term competitiveness of this essential pillar of the
European economy.

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