As 2024 concludes, the European Union (EU) reflects on a year of economic challenges, modest recovery, and strategic pivots to secure a sustainable and competitive future. From the euro area’s sluggish growth to the textile industry’s struggles and policy recommendations for a greener economy, the year has been a mixed bag of achievements and hurdles.
Economic Performance
The euro area economy expanded modestly by 0.2-0.3 per cent quarter-on-quarter in 2024, driven primarily by a recovery in external demand and exports. Consumer spending grew sluggishly despite rising real incomes, while firms reduced investments amid shrinking profit margins, lower capacity utilisation, elevated real interest rates, and negative business sentiment. The second half of the year offered little reprieve, with moderate growth expected only through improved consumption and investment.
International Trade
In June 2024, euro area exports to the rest of the world amounted to €236.7 billion ($250.09 billion), a 6.3 per cent decline compared to June 2023. Imports fell more sharply by 8.6 per cent to €214.3 billion ($226.42 billion). This trade dynamic widened the euro area’s surplus to €22.3 billion (approximately $24.7 billion), up from €18 billion in June 2023. For the first half of 2024, the euro area recorded a significant trade surplus of €107.5 billion, a stark turnaround from the €3 billion deficit in H1 2023.
Similarly, the EU posted a trade surplus of €20.9 billion ($23.15 billion) in June 2024, an improvement from €18.6 billion in June 2023. Between May and June 2024, the EU’s surplus doubled, reflecting strong export performance relative to imports.
Retail Trade
Retail trade in the EU saw modest growth in July 2024, with volumes rising by 0.1 per cent in the euro area and 0.2 per cent in the EU compared to June. Year-on-year, retail sales decreased by 0.1 per cent in the euro area but increased by 0.4 per cent in the EU. Among member states, Croatia (up 2.9 per cent), Austria (up 1.8 per cent), and Slovakia (up 1.8 per cent) led monthly growth. Conversely, Luxembourg (-2.1 per cent), Romania (-1.8 per cent), and Cyprus (-1.1 per cent) experienced declines.
On an annual basis, Luxembourg recorded the highest growth in retail trade volume at 10.3 per cent, followed by Croatia (7.9 per cent) and Bulgaria (6.8 per cent). Belgium (-4.4 per cent), Estonia (-3.1 per cent), and Finland (-2.1 per cent) posted the steepest declines.
The Used Textile Crisis
Europe’s textile sorting and recycling industry faced a severe crisis in 2024, driven by the war in Ukraine, logistical disruptions in Africa, and the rise of ultra-fast fashion. The volume of used textiles traded between the EU and non-EU countries dropped from 464,993 tonnes in 2022 to 430,185 tonnes in 2023. This oversupply led to a sharp decline in prices for second-hand textiles, while processing costs soared.
Sorting operators, facing unsustainable financial pressures, called for urgent policy interventions. Proposals included VAT reductions on textile repair, reuse, and recycling, as well as taxes on petroleum-based materials to incentivise recycled textile use and reduce reliance on virgin materials.
CIRFS Recommendations for Sustainable Textiles
The European Man-made Fibres Association (CIRFS) issued several recommendations to promote sustainable textiles while safeguarding the EU’s industrial base. Key proposals included:
Energy Cost Reductions: Using revenues from the EU Emissions Trading System (ETS) to support carbon-neutral industries and establishing a unified EU market for energy pricing and infrastructure.
Circular Economy: Creating a single market for waste and recycling, standardising end-of-life disposal costs, and implementing robust compliance checks for imported products.
Carbon Policy: Fast-tracking Carbon Contracts for Difference (CCfD) and delaying ETS allowance reductions if the Carbon Border Adjustment Mechanism (CBAM) proves ineffective.
Trade Defenses: Addressing non-market capacities, abolishing the lesser-duty rule, and integrating social and environmental standards into trade defense mechanisms.
France: Growth Amid Challenges
The International Monetary Fund (IMF) projected France’s GDP growth at 0.9 per cent for 2024 and 1.3 per cent for 2025, with inflation expected to reach 2.3 per cent by mid-2025. However, domestic political fragmentation and global geopolitical tensions pose risks to this outlook.
In June, France’s Consumer Price Index rose by 0.1 per cent month-on-month, driven by a 0.4 per cent increase in clothing and footwear prices. Year-on-year, inflation stood at 2.2 per cent, slightly lower than May’s 2.3 per cent. Between January and April, France imported $280.5 million worth of apparel from Cambodia, maintaining its position as Cambodia’s ninth-largest export market.
Germany: Mixed Signals
Germany’s trade and industrial performance remained under pressure in 2024 due to dwindling orders. In October, 41.5 per cent of German firms reported order shortages, the worst since 2009. Textile manufacturers were hit particularly hard, with 57.7 per cent facing a lack of orders.
Germany exported $1.397 billion worth of industrial textiles in H1 2024, a decline from $1.424 billion in H1 2023. Imports also fell to $642.9 million from $718.7 million during the same period. The US remained Germany’s top export market, while China led as its primary import source.
In May, Germany introduced updated sustainable textile procurement guidelines, emphasizing ecological and social criteria. By 2026, the government aims to ensure at least 50 per cent of public textile procurement aligns with these standards.
Italy: Declining Machinery Orders
Italy’s textile machinery sector faced significant challenges in 2024, with order indices falling by 17 per cent in Q2 and 19 per cent in Q3 compared to 2023. Foreign orders, particularly from India, Türkiye, and Bangladesh, dropped sharply. To counter this trend, Italian manufacturers sought opportunities in underdeveloped markets like Turkmenistan and Kyrgyzstan.
The broader textile and apparel industry also faced a downturn. Nearly 75 per cent of businesses reported lower revenues by mid-2024, with sales declining by 5.8 per cent in H1 and no improvement expected in H2. Despite a year-on-year export increase of 6.8 per cent in July, monthly exports dipped by 0.5 per cent due to seasonal fluctuations.
The Netherlands: Trade Decline
Between January and May 2024, the Netherlands imported $7.087 billion worth of apparel and exported $5.569 billion. Both imports and exports declined compared to the same period in 2023, with apparel exports down 13.6 per cent and imports falling 5.72 per cent. Germany remained the top destination for Dutch exports, while China led as the largest apparel supplier.
In July 2024, Dutch export volumes grew by 2.2 per cent year-on-year, but the export outlook turned increasingly negative due to declining confidence among European manufacturers.
Spain: Textile Waste and Sustainability
In Spain, initiatives to address textile waste gained momentum in 2024. The Spanish Association for the Management of Textile Waste partnered with municipalities and major fashion brands to improve collection and recycling rates. Meanwhile, consumer awareness campaigns emphasized the importance of sustainable consumption practices.
Looking Ahead
As the EU gears up for 2025, its focus remains on addressing economic challenges, promoting sustainable practices, and enhancing competitiveness in global markets. While 2024 highlighted vulnerabilities in trade, retail, and industrial sectors, the groundwork laid this year aims to position the EU as a leader in sustainable and inclusive growth.
