It’s very of its time, and yes, inappropriate now.
Unfortunately, there is still a lot of images like this around, especially online, and resources attempting to show diversity.
The intention behind them was probably actually not ill, but the issue now is that they perpetuate a view of diversity which is built on absolute difference rather than variety, and on fixed, stereotypical imagery. When these images are used in teaching contexts, they contribute to an inappropriate exotifying of those deemed to be ‘others’, as well as giving a misleading representation of cultures in the countries they are meant to represent. When used uncritically then children are receiving the message that these stereotypes are unproblematically representative of anyone from those countries.
There are plenty of ways to teach children about and represent different countries that don’t rely on these kinds of images, and retailers and schools really by now have no excuse not to look into alternatives to these.
Again, I am sure the intentions were good, but as historically minoritised and silenced voices begin to be listened to (not before time!), it should be entirely in controversial to acknowledge that this kind of representation of diversity is outdated and inappropriate now.
And of course, the eyes are a huge problem, no question.
I would consign the skirt to the bin, in the knowledge that you’ve done the right thing.