Fashion
S&P sees China growth slowing to 4% in H2 amid tariffs, weak demand
China’s economy is expected to slow sharply, with real GDP growth projected at about 4 per cent year-on-year (YoY) in the second half of 2025 and through 2026, down from 5.3 per cent in the first half of this year, according to S&P Global Ratings. The deceleration is driven by weakening exports, sluggish organic domestic demand, and only modest macroeconomic stimulus.
China’s overall exports held up through August despite a steep 33 per cent YoY fall in shipments to the US, due to robust growth to ASEAN markets. However, exports are expected to slow in the coming months due to higher US tariffs, slowing global demand, and rising Mexican import duties on economies without free trade agreements, which also cover China.
S&P Global Ratings sees China’s growth slowing to 4 per cent in the second half of 2025-2026 on weak exports, housing slump, and muted demand.
Asia-Pacific faces US tariff headwinds, with India hit hardest, but resilient consumption, AI-led investment, and policy easing will cushion the impact.
Inflation easing allows further regional rate cuts.
Uncertainty is amplified by the 90-day review mechanism under which China’s trade status with the US can be reset based on bilateral politics, leaving exporters vulnerable, S&P Global said in a release.
Domestic demand, which began the year strongly, is losing momentum as consumption and investment soften, dragged down by a persistent housing slump, weaker confidence, and fading impact of earlier trade-in schemes. Fiscal support has so far been limited given robust headline GDP in H1 2025, where net trade contributed 1.7 percentage points, but this boost will fade.
Some fiscal measures could emerge later this year, though their impact on 2025 growth would be modest and felt more in 2026. Persistent downward pressure on prices highlights structural overcapacity and muted demand, with profit margins across industries squeezed and nominal GDP growth slipping to 3.9 per cent in Q2, the weakest since the 2020 pandemic shock.
Beijing’s efforts to curb ‘involution’—cut-throat competition pushing down prices—have only partly slowed producer price declines, and the fundamental demand-supply imbalance remains unresolved.
Across Asia-Pacific, growth has held up in H1 2025 thanks to resilient domestic demand and strong exports, particularly of tech products and components from Southeast Asia and Taiwan, fuelled by global AI-related investment in data centres and equipment.
Domestic consumption has been robust in most emerging markets, supported by healthy labour markets, low inflation, and policy easing, while investment has been buoyant in India, Malaysia, and Taiwan. India’s growth is projected to hold at 6.5 per cent in FY25, supported by a benign monsoon, GST and income tax cuts, and accelerating government capex, though private investment remains subdued.
In Southeast Asia, GDP growth is expected to ease to an average of 4.5 per cent in 2025, with similar below-trend levels likely in 2026 as the impact of US tariffs deepens.
US tariffs remain a key external headwind, weighing on trade, investment, and growth both within the US and globally. The latest tariff schedule has left China slightly better off relative to earlier expectations but still facing much higher effective US tariffs compared to the pre-2018 period. Southeast Asian emerging markets are experiencing somewhat higher effective tariffs, while India is facing much sharper increases than anticipated, potentially undermining its manufacturing export ambitions.
Developed Asia’s exposure remains broadly in line with projections. The risk of further tariff adjustments is significant, particularly with Washington’s plans to curb transshipment and re-routing of shipments to avoid duties.
Monetary conditions are becoming more supportive across the region. Inflation has been easing since early 2024, helped by softer commodity and energy prices, allowing regional central banks to cut policy rates by an average of 55 basis points so far in 2025.
Currency appreciation against the US dollar has been strong for most Asia-Pacific economies since late 2024, particularly for the Malaysian ringgit and Thai baht, though some currencies softened slightly in Q3. With US policy rates expected to fall further, S&P anticipates additional rate cuts in Asia, particularly where inflation is below target.
In India, inflation has dropped faster than expected, to 3.2 per cent for FY25, creating space for a 25 bps rate cut by the Reserve Bank of India. Japan is expected to continue gradually raising rates as inflation converges toward the BOJ’s 2 per cent target, supported by narrowing wage-price gaps.
As a region heavily exposed to external trade, Asia-Pacific will feel the negative impact of rising trade barriers. Still, relatively solid domestic demand should cushion the blow.
Fibre2Fashion News Desk (HU)
Despite the overall decline, the group indicated improving momentum in the second half of 2025, with revenue contraction narrowing significantly compared to the first half. This trend reflects early gains from ongoing transformation initiatives, including operational restructuring, cost discipline, and retail network optimisation.
Lanvin Group has reported revenue of €240.5 million (~$276.58 million) in FY25, down 17.6 per cent YoY, amid global luxury headwinds.
While Lanvin and Sergio Rossi declined sharply, St John remained resilient.
North America was stable, but China weakened significantly.
The group continues restructuring, leadership changes, and retail optimisation, targeting stronger growth and profitability by 2026.
At the brand level, performance remained mixed. Lanvin and Sergio Rossi both recorded sharp declines of 30 per cent, while Wolford fell 14 per cent. St John showed resilience, with revenue slipping just 1 per cent, supported by an 8 per cent increase in North America in local currency terms. Wolford’s performance stabilised during the year, aided by improved supply conditions and stronger traction in e-commerce and wholesale channels. Meanwhile, Lanvin progressed in its creative repositioning under artistic director Peter Copping, Lanvin said in a press release.
Regionally, North America has emerged as the most stable market, with revenue declining a modest 6 per cent to €116 million. In contrast, Europe, Middle East, and Africa (EMEA) revenues fell 21 per cent, while Greater China saw a steep 42 per cent drop, reflecting softer demand and cautious wholesale activity. Other markets declined 26 per cent, underscoring broader global volatility in luxury consumption.
Across channels, direct-to-consumer (DTC) and e-commerce revenues declined 18 per cent to €164 million, while wholesale revenues fell 15 per cent. The Group continued to streamline its retail footprint, including selective store closures and organisational adjustments, as part of its broader efficiency drive.
Leadership changes also supported the transformation, with Marco Pozzo appointed CEO of Wolford, Barbara Werschine as deputy CEO of Lanvin, and Mandy West as CEO of St John. These appointments are aimed at strengthening brand execution and accelerating strategic priorities, added the release.
Looking ahead, Lanvin Group expects to largely complete its transformation programme in 2026. The company plans to deepen its presence in core markets, expand asset-light business models, and pursue strategic partnerships, while continuing creative renewal across its portfolio. These efforts are intended to reinforce long-term growth and improve profitability amid an evolving global luxury landscape.
Fibre2Fashion News Desk (SG)
Despite the tariff hike being larger than the 1930 Smoot-Hawley tariffs, the aggregate impact on the US economy appears small—between 0.1 per cent of gross domestic product (GDP) and minus 0.13 per cent, wrote Pablo Fajgelbaum, professor of economics at the University of California, Los Angeles, and Amit Khandelwal, Don-Soo Hahn professor of global affairs and economics at Yale University.
Though President Donald Trump’s 2025 tariff hikes raised US trade protectionism to the highest level in at least 80 years, these so far have had only a small effect on the US economy, a paper discussed at the Brookings Papers on Economic Activity conference recently noted.
That is because federal revenue generated by the tariffs and gains to US producers largely offset the tariffs paid by US importers.
That is because federal revenue generated by the tariffs and gains to US producers largely offset the tariffs paid by US importers, they wrote.
While the aggregate net economic impact may be small, the authors noted that the tariffs also have distributional impacts between producers and importers. They estimate roughly 90 per cent of the tariffs have been passed through to importers, with foreign exporters absorbing only about 10 per cent of the cost by lowering their before-tariff prices.
Except from China, the majority of US exports have not faced retaliatory tariffs. And, the tariffs’ magnitude may be smaller than perceived by the public because announced tariffs “exceeded the actual tariffs imposed at the border,” they wrote.
Moreover, 57 per cent of imports entered the US duty-free. That includes most imports from Canada and Mexico, which enter under the United States-Mexico-Canada Free Trade Agreement of 2020.
The authors found evidence that the tariffs are achieving the administration’s objectives of raising federal revenue and decoupling trade with China. However, they found no evidence, or said it is too early to determine, whether other stated goals will be met, including lowering import prices excluding tariffs, reducing the US trade deficit, increasing trade with friendly nations, boosting manufacturing jobs and wages, and reshoring strategic industries, a release from the Brookings Institution said.
The authors found that the reduction of US-China trade, which began shrinking with the application of tariffs in 2018, during the first Trump administration, “accelerated markedly in 2025”. However, the overall US goods trade deficit in 2025 rose modestly from 2024 and manufacturing jobs declined slightly despite the tariffs.
They also found that the tariffs were seemingly unrelated to trading partners’ pre-existing geopolitical alignment with the US, noting that tariffs on NATO members and key defence allies are only slightly lower than those imposed on the rest of the world.
Fibre2Fashion News Desk (DS)
The economic trajectory, which remained steady until early 2026, is now facing fresh headwinds as the conflict has disrupted key global supply chains, especially in energy and logistics, critical pillars of India’s economic stability.
The latest Monthly Economic Review by India’s Department of Economic Affairs projects a more uncertain economic outlook, citing disruptions to energy supplies and trade routes amid the Middle East conflict.
However, strong domestic growth, steady credit expansion, and resilient services exports continue to cushion the impact.
Despite rising risks, India has entered this phase from a sector steady.
The scale of disruption is stark. Ship movements through the Strait of Hormuz have nearly come to a standstill, from 200-300 a week to one a week, the review notes. This dramatic slowdown has tightened global oil and gas supply, pushing prices higher and increasing volatility across international markets.
The report warns of supply disruptions to oil, gas and fertilisers, higher import prices, higher logistics costs, and a possible decline in remittances by Indians in the Gulf countries.
These risks are particularly significant for India, which relies heavily on energy imports and has a large expatriate workforce in the Gulf region, contributing to remittance inflows.
Despite the risks, the review says India entered this phase from a position of strength.
On the domestic front, industrial activity has remained resilient.
“Retail inflation rose to a 10-month high of 3.21 per cent in February 2026, driven primarily by a sharp uptick in food prices,” said the review.
At the same time, the financial system continues to support growth. Bank credit expanded strongly, and the overall flow of financial resources to the commercial sector grew at 33.2 per cent (YoY).
The Finance Ministry review report emphasises the need for policy vigilance amid rising uncertainty.
Fibre2Fashion News Desk (DS)
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