New date, new venue and renewed format characterized this year the usual CSIL 2018 meeting on scenarios and forecasts for the furniture sector in 2019-2021.
On December 5th at Palazzo Giureconsulti in Milan CSIL presented the 2018 editions of two Reports, the “World Furniture Outlook 2019“ and the “Forecast Report on the Furniture Sector in Italy, 2019-2021“. The meeting was attended by a qualified audience representing the business world, trade associations, trade fairs and the trade press. This year's renewed format allowed a moment of debate with the guests in the hall, through a question and answer session to deepen the issues that emerged during the work and to examine some aspects related to current and forecast market scenarios.
At the speakers' table were Alessandra Tracogna, CSIL partner, Sara Colautti, CSIL partner and Stefania Tomasini from Prometeia. The works were introduced by Paola Govoni, CSIL partner and contact person for Press and External Relations.
The World Furniture Outlook 2019 report
The World Furniture Outlook 2019 Report contains analytical data on the furniture industry and forecasts for furniture demand growth in 2019-2020 in 100 countries, including 40 European, 21 Asian and Pacific, 21 Middle Eastern and African, 3 North American and 15 Central and South American.
The world furniture market
World consumption of furniture valued at production prices (i.e. excluding the markup for distribution) is around USD 460 billion and will continue to grow in 2018. Around 30% of world consumption is accounted for by imported furniture. The main furniture importing countries are: The United States, Germany, France and the United Kingdom. On the export front, the main countries are: China, Germany, Poland, Italy and Vietnam (two Asian and three European manufacturers). Sales on foreign markets in these countries continue to grow in 2018 and Poland and Vietnam have the highest growth rates.
For 2019, CSIL forecasts a further increase in world furniture consumption of around 3.2% in real terms. Asia and the Pacific is expected to be the fastest growing area. For foreign trade in furniture, the forecast for 2019 is a 4% growth in current dollars in the amount of international trade. However, a number of downside risks also persist for the furniture sector linked to the macroeconomic environment of the main players.
International trade has already started to slow down and is expected to close 2018 with an increase of 4%, with further slowdowns in the following years due to declining growth rates in the main world markets and international trade tensions. In 2019, and also in the following years, the slowdown in growth will be generalised and will affect all the main economies from the USA to China to the countries of the European Union.
The furniture sector in Italy
The Forecast Report on the Furniture Sector in Italy provides an updated and detailed picture of the prospects for the Italian furniture industry and market. The study includes an analysis both for the furniture sector as a whole and for individual sectors including upholstered furniture, kitchen furniture, home furniture and office furniture with preliminary data for 2018 and forecasts to 2021 for production, exports, domestic consumption and imports.
In Italy, the slowdown in the growth rate of the economy is already evident: the GDP growth rate for 2018 has been reduced to 1% in real terms (in 2017 +1.6%) and no improvement is expected for the following years. Negative signals come from manufacturing production in relation to the uncertainty about the medium-term prospects for the Italian economy, which are affecting household consumption propensities and business investment.
Household domestic consumption is expected to grow by only 1% on average over the forecast period, while a more substantial boost will come from foreign demand.
In 2018, the domestic market continued to grow although at very moderate growth rates and a year-end of +0.8% in real terms with low sectoral inflation is expected. The main determinants of demand are showing a positive trend and, together with the presence of the furniture bonus, have favoured the resilience of domestic consumption; however, uncertainty linked to future prospects has limited the actual amount of furniture purchases. As often happens in times of uncertainty, consumers decide to postpone a purchase of a certain amount, just as entrepreneurs prefer to wait before making a substantial investment. On foreign markets, sales show a more brisk growth of close to 2% driven by growing foreign demand with a dollar/euro exchange rate of 1.18.
Sales on non-European markets have been growing slightly higher than those on European Union markets since June, mainly due to good performance on the American and Chinese markets. The drop in sales on the Russian market seems to have stopped and demand from Middle Eastern countries is improving. Production in the sector is therefore estimated to close the year with an increase of 1% in real terms.
Forecasts for 2019
2019 will still be a year full of uncertainties in which potential foreign demand in stable growth will once again support Italian exports while elements of weakness will still remain on the domestic market. The Stability Law for 2019 provides for the confirmation of the mobile bonus and a positive boost will also come from the construction of new houses, but at present it can be assumed that the expansionary measures of the manoeuvre will not be such as to support a higher growth than 2018 and will be around 0.5%.
On foreign markets, the expected depreciation of the euro against the dollar in 2019 will support demand from countries outside the European Union, while demand from countries within the European market will be less dynamic. Exports are therefore expected to grow by 1.6% at constant prices in 2019. Given the limited increases in both domestic and foreign demand, the value of production in real terms will rise again by only 1%. In the following two years, an improvement in the international framework and greater clarity on the domestic situation will be accompanied by a stronger growth in Italian furniture exports (+3% on average) and a still contained but improving domestic demand (+1%), leading to a growth in production of around 2%.
In July 2019 an update of the forecasts for the 100 countries will be available in the new edition of the World Furniture Outlook report and a specific note dedicated to Italy.
Further information on CSIL's research and activities can be found at www.csilmilano.it and www.worldfurnitureonline.com.