Fashion makes up for 5% of Italian GDP

The year 2024 has been for lack of better terms, a terrible year for the luxury and fashion sectors. The luxury crisis has significantly impacted the revenues of major brands, with giants like LVMH and Kering continuing to report losses throughout the year. In such a bleak and gloomy landscape, good news now appears as an oasis in the desert. According to a new report by Cassa Depositi e Prestiti, the fashion sector remains one of the driving forces of the national economy, contributing to 5.1% of Italy’s GDP and generating a total value of €75 billion, with over 1.2 million workers. Not only does fashion lead on a national level, but globally, Italy confirms its position as the world’s leading producer of haute couture, supplying 29% of materials to European groups and attracting two-thirds of luxury Maisons for their production. However, it is no secret that Made in Italy is facing a crisis. Alarming data points to increasing closures and a growing reliance on wage subsidies in Italy’s artisanal supply chain. In 2023, the sector exported around €65 billion, representing 10% of national exports, with 55% of sales directed to non-EU markets. The early months of 2024 have been the worst, with a 5.3% contraction in exports, amounting to a loss of €1.8 billion. While large companies manage to keep profits stable, small enterprises are struggling more, hindered by market fragmentation and high competition. The first quarter of 2024 saw a 10% drop in revenues, followed by an additional 7% decline in the second quarter, heavily affecting key sectors of the supply chain.

Despite the challenges, the CDP report confirms that Made in Italy remains a global symbol of success. Three fundamental pillars support the success of Italian artisanal tradition. First and foremost is the superior quality of materials, which guarantees an excellence that is difficult to replicate. Second is the DNA of Italian luxury brands: thanks to the talent of designers and extensive distribution networks, brands like Prada and Miu Miu continue to post positive results, growing even in a globally apocalyptic scenario. Finally, the ability to innovate through creative collections and a strong connection with local cultural heritage strengthens the bond between tradition and modernity. A clear example is represented by the maisons choosing Italy as the backdrop for their Couture shows: after Louis Vuitton’s event on Lake Maggiore in 2023, Dior has chosen Rome to present its Cruise collection next May.

However, these strengths are not enough to offset the numerous challenges that have hit the sector over the past year. The global geopolitical context and the energy transition continue to put pressure on supply chains, further exacerbating difficulties. Consider that the current crisis has been heavily fueled by a decline in demand from Chinese customers, alongside various economic crises affecting Western countries. Additionally, the competition between fast fashion and luxury highlights one of the key issues in today’s market: sustainability. According to the report, 76% of luxury consumers demand ethical commitments from brands, pushing the industry to integrate eco-design criteria and comply with regulations prohibiting, for example, the destruction of unsold goods. While major groups have already embarked on virtuous paths, many small and medium-sized enterprises still need to bridge a wide gap. This is particularly critical considering that 79% of Italy’s production comes from micro, small, and medium enterprises. Perhaps the time has come to give greater attention to the real protagonists of Made in Italy.