Editorial: Brazil’s Textile and Clothing Industry Rides Out the Storm - But for How Long?

Brazil has been seen as something of a success story in recent years. At a time when other countries were suffering, the Brazilian economy was growing at a fairly healthy pace.

Admittedly, the economy is now in recession. But the decline in its GDP in the first quarter of 2009 was a modest 0.8%, and many investors believe that Brazil will recover faster than other countries.

When the Brazilian economy does well, so does the textile and clothing industry. This is because most of the industry’s output is sold to Brazil’s huge domestic market of 198 mn consumers—and the purchasing power of these consumers is growing steadily.

Exports are significant but remain low for such a large industry —despite attempts to open up new markets in recent years. In 2008 they accounted for a mere 4% of the industry’s total sales of US$43 bn, according to a report by Jozef de Coster for EmergingTextiles.com.

Normally, an industry’s overdependence on its domestic market might be seen as a weakness. But in the current climate it is a strength. The textile and clothing industries which are currently suffering the most are those that are highly dependent on exporting to markets which are now in recession—although, with world trade in sharp decline, most national industries are suffering to a greater or lesser degree.

Another strength of the industry in Brazil is its focus on technical fabrics. According the Associação Brasileira da Indústria Têxtil e de Confecção (ABIT—the Brazilian textile and clothing industry association), these accounted for 26% of textile and apparel exports in 2008, making them the biggest export category during the year. Clothing, on the other hand, accounted for only 14%.