Fashion
46% expect conditions to worsen in 2026: The State of Fashion 2026
Whereas in the past, fashion leaders facing the volatility of global affairs were uncertain about what lay ahead, now they seem to have accepted that constant change is simply the new normal.
‘Challenging’ has overtaken ‘uncertainty’ as the word executives polled in ‘The State of Fashion 2026’ report used most frequently to describe the industry in 2026, with tariffs cited as the topmost hurdle.
Forty-six per cent say they expect conditions to worsen next year, while 36 per cent view North America as unpromising or very unpromising.
A quarter believes industry conditions will improve in 2026.
Many leaders are feeling pessimistic and are not expecting an easy road ahead, with 46 per cent saying they expect conditions to worsen next year, compared with 39 per cent in last year’s survey.
By geography, 36 per cent view North America as unpromising or very unpromising, double last year’s share, according to the The State of Fashion 2026 report. The first such report was published in 2016.
But not everyone is so downbeat. Among those polled, a quarter believes industry conditions will improve, up from a fifth in 2025, suggesting some players see pockets of opportunity.
Sentiment towards China is finally picking up, even as conditions remain difficult: 28 per cent view the market there as unpromising in 2026, down from 41 per cent heading into 2025.
The fashion industry’s main agenda next year will be adapting to this new environment where trade, consumer behaviour and technology remain in rapid flux. Agile brands that can adapt quickly are likely to emerge as the winners, the report noted.
With turbulent conditions, including volatile input costs, supply chain disruptions and slow growth, straining fashion’s economic model, artificial intelligence (AI) is shifting from a competitive edge to a business necessity.
Companies are reshaping workforces accordingly, with some existing jobs becoming more AI-centric, enabling roles to shift towards higher-value creative and analytical tasks.
To harness this technological change, companies must redesign their processes and compete for AI talent—looking beyond the fashion ecosystem to find it—while protecting the essential creativity that makes fashion tick.
Business leaders must shift their focus from small pilots and experiments that can only deliver incremental change towards a more fundamental reassessment of how their organisations work. And while still nascent, agentic AI is reshaping how people work and collaborate, so fashion companies will need to figure out how they can harness this emerging technology too.
AI is also transforming how people shop. Customers are turning to large language models to search for products, compare offerings and receive tailored recommendations.
Some are already using AI as style and wardrobe consultants, seeking advice on what to buy and where to buy it, making fashion brands’ presence in AI chatbot responses the new search engine optimisation.
These dynamics will only grow more pronounced as agentic commerce accelerates in the second half of the decade, says the report.
Fostering customer loyalty is emerging as an important frontline in the battle for customers, with more than half of executives citing retention strategies as a key theme shaping the industry in 2026.
To retain—and attract—customers, brands will need to give them what they want, and increasingly that means offering value. While luxury players raised prices without corresponding improvements in product quality or creativity, design-led brands in the mid-market elevated their products and store experiences.
Now, the mid-market is the fastest-growing segment, replacing luxury as fashion’s main value creator. Meanwhile, smart eyewear that blends fashion and technology has become the fastest-growing accessory category, with further product launches expected in 2026.
High prices remain a significant hurdle for aspirational customers, and anyway, more and more would-be luxury shoppers are focusing on their personal wellness: body, mind and health—a trend the survey first called out in 2017. Next year will inevitably be yet another year of dislocation for fashion companies. In a flat market, only those companies that capture the hearts and minds of customers will manage to grow and gain market share, they report adds.
Fibre2Fashion News Desk (DS)
The report highlighted that although overall energy demand growth slowed compared with 2024 and remained slightly below the previous decade’s average, electricity demand rose by around 3 per cent, driven by increased usage across buildings, industry, electric vehicles, and data centres.
Global energy demand growth slowed to 1.3 per cent in 2025, while electricity demand rose around 3 per cent, driven by EVs, industry, and data centres, according to IEA.
Solar PV led supply growth for the first time.
Oil demand grew modestly, and coal growth slowed.
CO2 emissions rose slightly.
Renewables and nuclear expansion highlighted an accelerating shift towards cleaner energy systems.
Solar photovoltaic (PV) emerged as the largest contributor to global energy supply growth for the first time, accounting for over 25 per cent of the increase. Natural gas followed with a 17 per cent share, while renewables and nuclear together met nearly 60 per cent of additional demand.
Global oil demand rose modestly by 0.7 per cent, reflecting the continued expansion of electric vehicles, with sales surpassing 20 million units in 2025. Coal demand growth slowed overall, with declines in China offset by increases in the United States due to high natural gas prices.
“Global energy demand continued to increase in 2025 against a complex economic and geopolitical backdrop, with one trend unmistakeable: the expanding electrification of economies,” said Fatih Birol, IEA executive director.
He added that electricity consumption was growing much faster than overall energy demand, with one energy source outpacing all others. He noted that solar PV accounted for over a quarter of global energy demand growth for the first time, followed by natural gas, and added that countries prioritising resilience and diversification would be better placed to manage volatility and ensure secure, affordable energy.
Regional trends varied significantly. Energy demand growth in the United States rose sharply, supported by industrial activity, data centre expansion, and colder weather, while China’s growth slowed to 1.7 per cent due to rising renewable adoption and improved efficiency.
Global energy-related CO2 emissions increased marginally by around 0.4 per cent. Emissions declined in China and remained flat in India, aided by renewable deployment and favourable weather conditions, while advanced economies recorded higher emissions growth due to colder winter conditions.
In the power sector, solar PV generation surged by a record 600 terawatt-hours, marking the largest annual increase for any electricity generation technology. Battery storage emerged as the fastest-growing segment, with around 110 gigawatts of new capacity added, while nuclear energy also saw renewed momentum with over 12 gigawatts of new reactors under construction.
The IEA noted that cumulative deployment of low-emissions technologies since 2019 now offsets fossil fuel consumption equivalent to the entire energy demand of Latin America, underscoring the accelerating transition towards cleaner energy systems.
Fibre2Fashion News Desk (SG)
In a blog post, Alfred Kammer, director of the IMF’s European department, said his organisation sees growth slowing down in the continent. Initial data point already to weaker private investment and consumption.
The energy shock that has hit Europe due to the Middle East conflict, though smaller than in 2022, is weighing on growth and pushing inflation higher, an IMF expert recently cautioned.
IMF sees growth slowing down in the continent.
Initial data point already to weaker private investment and consumption.
Central banks must remain laser focused on keeping inflation expectations anchored, he wrote.
The outlook for euro area growth is projected at just 1.1 per cent in 2026, for the European Union it is 1.3 per cent; and this forecast comes with a high degree of uncertainty.
In a more severe scenario as described in the World Economic Outlook—a persistent supply shock compounded by tightening financial conditions—the EU could come close to recession with inflation approaching 5 per cent. No European country is spared, Kammer observed.
Policymakers face intense pressure—to act fast, visibly and for all, which results in policies that have more long-term downsides than short-term benefits, he wrote.
Targeted support is much more effective. Europe’s response to this shock should be shaped by two imperatives, he suggested. First, robust macroeconomic policy that is fit for a world with unpredictable and frequent shocks, and second, resilience built without wasting fiscal resources or getting in the way of markets.
The first imperative involves getting monetary and fiscal policy right. Central banks must remain laser focused on keeping inflation expectations anchored, the IMF expert wrote.
In the euro area, where inflation is close to target and medium-term expectations are broadly anchored, the European Central Bank has some scope to wait and observe the shock evolve before acting. IMF now expects a cumulative 50 basis point increase in the policy rate by the end of this year, maintaining a broadly neutral monetary stance in light of higher near-term inflation expectations, Kammer noted.
A rise in core inflation or increasing medium-term expectations would warrant a more restrictive stance, he wrote.
“Europe must reform under pressure. The current shock is not an argument for delay. It is all the more reason to push forward the reform agenda,” Kammer added.
Fibre2Fashion News Desk (DS)
The text of the agreement was released on February 7.
India and the US will today resume talks on the first phase of their bilateral trade agreement in Washington, DC.
The three-day talks will discuss the situation that has evolved under the changed US tariff regime.
The two unilateral probes launched by the USTR against India may also be discussed at the meeting.
Darpan Jain, additional secretary in the department of commerce, is leading the Indian team.
Darpan Jain, additional secretary in the department of commerce, is leading the Indian team.
The three-day talks will discuss the situation that has evolved under the changed US tariff regime, according to Indian media reports.
Following the US Supreme Court decision against the sweeping tariffs imposed by President Donald Trump on several countries, the US administration imposed a 10-per cent tariff on all countries beginning February 24 for 150 days.
This led to a meeting between chief negotiators of both sides scheduled in February getting postponed to this month.
The two unilateral investigations launched by the US Trade Representative (USTR) against India may also be discussed at the meeting. India has rejected allegations made by the USTR in these two probes under its Section 301 of Trade Law and has called for termination of the probes as the initiation notice has failed to provide cogent rationale to substantiate the claims.
Fibre2Fashion News Desk (DS)
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