The Recession That Wasn’t?

In July of last year, BoF asked what a recession would mean for the fashion industry. We’re still waiting to find out. While it’s clear that consumers are spending less in some countries, and the great post-pandemic US hiring boom is slowing, the worst always seems to be just around the corner.

Last week, the International Monetary Fund lowered its forecast for global growth, warning that “the fog around the world economic outlook has thickened.” US employment and some consumer data are looking troubling, if not quite dire enough to ring the recession alarm.

The biggest reason doomerism has yet to set in is China. The country’s exit from lockdown was perfectly timed to provide a new source of growth for brands just as the American post-pandemic boom was showing its age. Initially, there were fears of a hangover from the messy end of “Zero Covid” and the troubled property market. But so far, the data is mostly pointing toward a robust recovery, with shoppers leading the charge. Stores in major cities such as Shenzhen and Chengdu have already surpassed 2019 traffic levels, retail sales are up nationwide and Chinese tourists are flocking to domestic, and increasingly, international destinations.

The next data point from China is a big one: first-quarter GDP, due out at 2 a.m. GMT on April 18. China’s government set a conservative 5 percent growth target for 2023 in March, raising fears that the country’s pandemic recovery would take longer than anticipated. The average forecast is for the economy to have grown by 4 percent in the first quarter, on track for 5.4 percent growth in 2023, Reuters reported.

The out-of-sync US, European and Chinese economic cycles play to the advantage of global brands, which can shift marketing and other resources to whatever region is looking promising at the moment. For instance, LVMH shares hit a record high last week, as strong sales in China overshadowed some talk from the group’s executives about a slowdown in the US.

If last year every brand had to show a collection in Los Angeles (next up: Fear of God at the Hollywood Bowl on Wednesday), this might be the year the party returns to Shanghai.

What Else to Watch for This Week

Tuesday

China releases first-quarter GDP data

Salone del Mobile begins in Milan

Wednesday

Fear of God shows at the Hollywood Bowl in Los Angeles

L’Oréal reports first-quarter results

UK, Eurozone report March inflation data

Thursday

Hermes shareholder meeting

Ferragamo, Lanvin report quarterly results

South African Fashion Week begins

Friday

L'Oréal annual meeting

UK March retail sales

Saturday

Earth Day

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.