LONDON, United Kingdom — After a slowdown in 2016 marked by volatility and uncertainty, our analysis suggests a slight recovery in 2017, to a point where the industry may see 2.5-3.5 percent growth next year. This slight recovery stems from a range of sources. First, macroeconomic indicators, including global GDP growth forecasts, are projected at 3.4 percent compared with 3.1 for 2016; however, at the time of printing, these had not been adjusted to reflect the ongoing impact of political shifts in the United States and the United Kingdom.
Second, the investment community expects improvements across the entire fashion industry, particularly driven by the behemoths within these segments, which are reorganising and divesting non-performing, non-core brands. This is confirmed by the key executives in the BoF-McKinsey Global Fashion Survey, who also expect increasing growth across categories and sentiments: 40 percent of respondents expect conditions for the industry to improve in 2017. However, it is important to note that 37 percent of respondents expect conditions to get worse and a significant number of fashion heavyweights —especially in the high-end segments — do not foresee any kind of recovery in 2017.
In terms of sales, our analysis suggests that the fashion industry will grow 2.5-3.5 percent in 2017, up from 2.0-2.5 percent in 2016. While this represents a slight recovery, it is not yet at the historical 5.5 percent annual growth it enjoyed for many years. Driven by the factors above, and in particular a rebalancing environment in China and North America, growth in 2017 will likely be in line with GDP growth expectations. Given the ongoing impact of political changes across countries and recent election in the United States, world GDP forecasts and other macroeconomic indicators such as oil and commodity prices are highly speculative. Due to continuing global challenges, fashion will not again in 2017 outpace GDP growth by multiple percentage points, as it did over the past decade.
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