Milan Fashion Week kicks off tomorrow amidst uncertainty over the global economic picture

As Milan Fashion Week officially commences tomorrow, February 25th, with 56 physical and six digital runway shows, 65 presentations, and 23 events, the figures from the National Chamber of Italian Fashion's Fashion Economic Trends report offer a snapshot of the sector and insights into what the coming months may hold. Whispers of a potential Versace acquisition by Prada Group and the succession plans for the creative director at Gucci, which opens the event tomorrow, will undoubtedly provide a backdrop to the runway soundtracks. The event runs through March 3rd.

According to the National Chamber of Italian Fashion's Fashion Economic Trends report, the negative trend that characterized the Italian fashion industry throughout 2024 softened in the fourth quarter. While 2024 closes negatively for Italian fashion, there was a mitigation of negative signals in Q4. Positive performance in employment and income, the latter influenced by the 2024 renewal of collective bargaining agreements for various categories, is expected to positively impact domestic demand.

In the final months of the year, data for some indicators, while remaining negative, showed signs of stabilization. Turnover, for example, saw its decline (-4.2 percent compared to the same period in 2023) lessen, marking the smallest contraction of the year. Other indicators, such as prices and retail sales in apparel, registered positive performances.

Although still preliminary, Q4 data confirms the -5.3 percent forecast, which can now be considered a preliminary estimate for 2024.

The mix of sector dynamics remained unchanged from Q3, with "core" sectors (textiles, apparel, leather goods, and footwear) experiencing greater difficulty with declining turnover, while "related" sectors (beauty, eyewear, jewelry, and costume jewelry) saw growth.

Exports and Imports

Total Italian fashion exports grew by 2.6 percent in the first ten months of 2024, thanks to the double-digit increase in related sectors (+21.8 percent), which more than offset the decline in core sectors (-4.2 percent).

Imports reflect the weakness of Italian domestic demand and are down in both core sectors (-3.1 percent) and related sectors (-3.3 percent).

The overall trade balance for fashion and related sectors over the first ten months of 2024 was a positive and amounted to 35.7 billion euros, an increase of 3.5 billion compared to the same period in 2023.

The stabilization at the end of the year and the anticipated improvement in the international macroeconomic outlook for 2025, albeit with the significant uncertainty surrounding future US trade policies introduced by the new Trump administration, suggest a return to turnover growth in 2025, potentially in the second half of the year.

The negative trend in Italian fashion turnover softened in the fourth quarter. The economic situation remains better in related sectors than in core sectors. Fourth quarter data confirmed a challenging period for the Italian fashion industry. The decline in turnover (-4.2 percent compared to the same quarter of 2023) was slightly less than that of the third quarter, and the least negative of the year.

According to Fashion Economic Trends, fashion turnover performance in the fourth quarter aligned with the average for the manufacturing industry, after underperforming the average in the previous three quarters.

The fourth quarter figures are still provisional but confirm the -5.3 percent forecast, which can now be considered a preliminary estimate for 2024.

Industrial prices in core sectors decreased in five out of six months in the second half of the year. However,seemingly stabilized in December, with positive figures, albeit limited to a few decimal points, allowing the year to close with a slight price increase (+0.2%) over 2023. This comprises a decline in upstream textile segments and growth of around 1 percent for apparel and footwear.

Weakness in the Italian Market Compresses Imports

Total Italian fashion exports grew by 2.6 percent in the first ten months of 2024, thanks to the double-digit increase in "related" sectors (eyewear, jewelry, costume jewelry, and beauty), +21.8 percent overall and +31.4 percent to non-EU countries, which more than offset the decline in "core" sectors (textiles, apparel, leather, leather goods, and footwear), -4.2 percent overall and -6.4 percent to non-EU countries.

The strong divergence between the two segments resulted in related sectors accounting for 45 percent of total Italian fashion exports for the first time.

Forecasts for the Coming Months

"Persistent geopolitical tensions contribute to continued high uncertainty in the global economic landscape, accentuated in the early months of 2025 by expectations regarding the trade policy direction of the new US administration, which has presented itself as very assertive, but in initial practice seems characterized more by bombastic announcements than by actually restrictive trade practices," experts explain.

In 2025, growth rates in major countries are expected to mitigate and, to some extent, reverse the weakness in major geo-economic areas, with greater convergence of growth rates.

The latest OECD forecasts show a deceleration of GDP in China to +4.7 percent and in the United States to +2.4 percent, against an acceleration in the Euro area, expected to grow by +1.3 percent. Within the EU, major countries will continue to show heterogeneity in economic fundamentals. In Germany, after stagnation in 2024, moderate expansion (+0.7 percent) is expected in 2025; in France, growth is forecast at a more moderate pace (+0.9 percent, after +1.1 percent in 2024); in Spain, despite a deceleration, expansion rates would remain relatively higher than those of other major countries at +2.3 percent.