Fashion
China GDP growth seen at 4.3% in 2026 amid moderating export momentum
Monetary policy is expected to focus on fine-tuning rather than aggressive easing. The People’s Bank of China is likely to rely on liquidity operations and reserve requirement ratio adjustments, while avoiding meaningful policy rate cuts to preserve banking sector profitability and financial stability, JP Morgan said in its 2026 Asia Outlook report.
Exports remain the dominant driver of growth, underscoring the uneven nature of China’s recovery. China’s export engine continues to outperform despite rising global protectionism. Real exports are on track to grow around 8 per cent in 2025, lifting China’s share of global exports to about 15 per cent. Exports to the US now account for less than 10 per cent of total shipments, reflecting China’s success in expanding sales across non-US markets.
China’s GDP growth is forecast at 4.3 per cent in 2026 as export-led momentum moderates, as per JP Morgan.
Policy support will remain accommodative, with fiscal expansion and cautious monetary fine-tuning.
Exports continue to drive growth despite rising protectionism and trade frictions.
A weaker yuan and growing AI investment are expected to shape China’s medium-term economic outlook.
While manufacturing capacity is gradually diversifying towards ASEAN and India, these regions remain heavily dependent on Chinese inputs and capital goods. This reinforces China’s central position in global supply chains, even as geopolitical tensions persist.
For global competitors, China’s export strength is intensifying pressure. Japan and South Korea are losing market share in several sectors, while Southeast Asian economies and India, despite export gains, are recording widening trade deficits with China. Replicating China’s manufacturing ecosystem remains difficult due to differences in scale, speed, and state-backed coordination.
Rising competitiveness has also fuelled trade frictions. Since 2024, several economies have introduced anti-dumping and countervailing measures on Chinese products. These barriers are expected to slow export growth in 2026, moderating China’s strongest post-pandemic growth driver, the report added.
Despite a trade surplus exceeding $1 trillion year-to-date, the yuan has weakened by about 4 per cent on a trade-weighted basis. Analysts see limited scope for sustained appreciation, given the managed exchange rate regime and concerns over export competitiveness and deflationary pressures.
Looking beyond traditional drivers, China is accelerating investment in artificial intelligence as a potential new growth pillar. Industry-wide AI and cloud capital expenditure is projected to exceed $70 billion in 2026. While the sector’s near-term impact on headline growth may be limited, it is expected to play an increasingly important role in shaping China’s economic trajectory beyond 2026.
Fibre2Fashion News Desk (SG)
The gross profit reached SEK 25,138 million (~$2.39 billion), with the gross margin improving to 50.7 per cent from 49.1 per cent a year earlier, supported by lower markdown costs and more efficient sourcing.
H&M has reported net sales of SEK 49,607 million (~$4.72 billion) in Q1 FY26, with sales down 1 per cent in local currencies.
Improved cost control lifted gross margin to 50.7 per cent and operating profit rose 26 per cent.
The net profit increased to SEK 704 million (~$75.05 million), while inventory fell 16 per cent.
Currency effects weighed on revenue despite stronger margins and improving sales.
The operating profit rose by 26 per cent to SEK 1,512 million, lifting the operating margin to 3 per cent from 2.2 per cent. Selling and administrative expenses declined by 1 per cent in local currencies and by 9 per cent in SEK terms, reflecting continued cost discipline, H&M said in a press release.
The net profit after tax (PAT) increased to SEK 704 million (~$75.05 million), with earnings per share (EPS) improving to SEK 0.45 from SEK 0.37. Inventory management also showed progress, with stock-in-trade falling 16 per cent to SEK 34,608 million, indicating improved inventory productivity.
However, sales in SEK terms were impacted by a currency translation effect of just over 9 percentage points due to the strengthened Swedish krona. The quarter began with weaker demand following strong Black Friday trading, though sales trends improved towards the end, supported by spring collections.
“Good cost control and improved gross margin contributed to strengthened profitability in a quarter marked by cautious consumption and large currency translation effects,” said Daniel Erver, CEO at H&M.
Looking ahead, H&M expects March 2026 sales to rise by 1 per cent in local currencies. The company also highlighted its sustainability progress, noting that 32 per cent of materials used in 2025 were recycled, while 91 per cent were either recycled or sustainably sourced.
Fibre2Fashion News Desk (SG)
A total of 25 pilot investments led by small and medium enterprises (SMEs) have progressed from the lab to near-market stage under RegioGreenTex, a three-year European Union (EU)-funded project that recently concluded. Most of these are expected to be commercialised within one to three years.
Twenty five pilot investments led by SMEs moved from lab to near‑market under RegioGreenTex, an EU-funded project that ended recently.
Most of these are expected to commercialise in one to three years.
Five regional hubs mapped SME needs and developed services and value chains as well as tools to help SMEs.
These are now open for collaboration and the pilot portfolio is primed for investors and adopters.
At least 70 per cent of the EU grant was allocated to SMEs. A total of 43 partners from 11 regions across eight countries participated in the project, leveraging their expertise towards a common goal of advancing industry and research.
RegioGreenTex was one of the first projects funded under the Interregional Innovation Investments (I3) Instrument programme that focused on process, service and business model innovation, developing advanced textile recycling technologies, regional recycling hubs, and a digital ecosystem for matchmaking and capacity building.
Five regional hubs mapped SME needs and developed services and value chains as well as tools that keep helping SMEs, an official release said.
The RegioGreenTex Digital Tool keeps matchmaking, sharing trainings and hosting the participants’ knowledge base.
The Waste Wizard shows how artificial intelligence-enhanced matchmaking can link leftover textiles with the right reuse or recycling routes.
From recycled-content yarn processes (Tintex) to Recycrom low-impact dyeing (Officina39), ultrasonic quilting for full recyclability (Rovitex) and hybrid recycled-fibre yarns (Hilaturas Mar), the pilots showed concrete, repeatable ways to cut impact without losing performance.
The hubs are now open for collaboration, the digital tools are live and the pilot portfolio is primed for investors and adopters.
Fibre2Fashion News Desk (DS)
While trends in high frequency indicators for January-February 2026 appear favourable, the heightened uncertainty around the duration of the Middle East conflict casts a shadow on the near-term macroeconomic outlook for India amid high import dependency for items like crude oil, natural gas and fertilisers, it noted.
India’s FY27 GDP growth is likely to slow to 6.5 per cent from the projected 7.5 per cent in FY26 owing to the impact of higher energy prices and concerns around energy availability, ICRA Ratings said.
The heightened uncertainty around the duration of the Iran war casts a shadow on the near-term macroeconomic outlook for India.
If the conflict lasts longer, the adverse effects could widen across sectors.
If the conflict lasts for an extended period, the adverse implications of the same could widen across sectors, amid an uptick in input costs and the consequent impact on profitability of the India corporate sector.
Amid the projected uptrend in the consumer price index-based inflation in FY27 with risks tilted to the upside, ICRA Ratings expects an extended pause on the policy rates by the central bank’s monetary policy committee in the fiscal despite the anticipated softening in the GDP growth. However, it expects the Reserve Bank of India to continue to intervene on the liquidity front during FY27.
The available data for January–February FY2026 indicate a positive trend across most non-agricultural indicators, with the year-on-year performance of 12 out of 18 indicators improving compared to the third quarter of FY26, while the remaining six deteriorated.
Fibre2Fashion News Desk (DS)
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