2025 marked by elevated macroeconomic and geopolitical volatility
Subdued consumer demand weighs on global apparel industry in 2025
Muted industry growth particularly visible in Europe and the U.S.
General economic situation
Fiscal year 2025 was marked by challenging global economic conditions, characterized by elevated uncertainty and volatility. Although inflation eased in most regions, supported by monetary policy decisions from the U.S. Federal Reserve (Fed) and the European Central Bank (ECB), global trade remained constrained. Economic momentum was uneven over the course of the year: growth proved relatively robust in the first half, supported in part by front-loaded consumption as businesses and consumers anticipated higher tariffs, while the second half of the year saw a noticeable slowdown. Investment flows remained subdued despite a more stimulative fiscal stance in several major economies, continuing to weigh on economic growth. Geopolitical tensions, including the conflicts in Ukraine and the Middle East, as well as higher tariffs, further heightened volatility and spilled over into financial markets. While subsequent agreements and policy adjustments moderated some extremes, economies and markets continued to adapt to a more protectionist and increasingly fragmented environment. In its latest forecast, published in January 2026, the International Monetary Fund (IMF) estimates global economic growth for 2025 at 3.3%, on par with the previous year (2024: 3.3%).
Growth of the global economy1
(IN %)
Estimates IMF.
Without Japan
According to IMF estimates, economic growth in the eurozone continued to recover, improving to 1.4% in 2025 (2024: 0.9%). While most major European economies recorded weaker outputs compared to 2024, including France at 0.8% (2024: 1.1%), Germany managed to reverse a negative trend and return to modest growth of 0.2% (2024: minus 0.5%). Although the ECB’s restrictive monetary policies helped ease inflation pressures, uncertainty and volatility persisted. In the United Kingdom, economic growth increased slightly to 1.4% in 2025 (2024: 1.1%), while inflation remained sticky amid continued uncertainty.
The U.S. economy was shaped by several developments over the course of the year, including the change in administration, the introduction of new policies, and newly imposed tariffs. Despite a challenging environment marked by elevated inflation and subdued consumer demand, the U.S. continued to outperform other major economies, supported by several Fed rate cuts and robust stock market performance. Nevertheless, economic growth slowed to 2.1% in 2025 (2024: 2.8%). Despite global uncertainties and higher trade barriers, Latin America demonstrated a degree of resilience, recording growth of 2.4% in 2025, in line with the prior-year level (2024: 2.4%).
China recorded stable economic growth of 5.0% in 2025 (2024: 5.0%), supported in part by a front-loaded increase in exports. The economy faced several headwinds, including ongoing challenges in the property market and subdued consumer confidence, while government stimulus measures provided only limited support. Trade tensions, including tariffs, continued to influence trade dynamics, but overall growth remained resilient. The broader Asia region (excluding Japan) grew 5.4% in 2025 (2024: 5.3%), driven by stronger output in India. In Japan, the economy rebounded strongly, recording growth of 1.1% in 2025 (2024: minus 0.2%), primarily fueled by robust exports.
Industry development
For the global apparel industry, fiscal year 2025 was shaped by persistent macroeconomic and geopolitical uncertainty, elevated inflation, and increased tariffs that disrupted global supply chains. These factors reshaped global trade flows and forced brands and suppliers to adapt through price adjustments, shifts in sourcing, and efficiency gains, while consumer sentiment remained muted and demand for discretionary spending subdued. According to a joint study by The Business of Fashion and McKinsey & Company, published in November 2025, growth for the global apparel industry (excluding the luxury segment) is estimated at 1.5% to 2.5% for fiscal year 2025, and thus slightly below the prior-year level (2024: 2% to 3%).
In Europe, the apparel industry (excluding the luxury segment) continued to face weak consumer demand in 2025, leading to a further slowdown in revenue growth to a range of 1% to 2% (2024: 2%). Although inflationary pressures eased modestly, persistent economic uncertainty and geopolitical tensions kept personal savings rates elevated, constraining retail spending. In the U.S., consumer sentiment was particularly challenging in 2025, with the U.S. Consumer Confidence Index (CCI) falling to its lowest level since 2020 following announcements of new tariffs. Monetary policy decisions, combined with heightened geopolitical uncertainty, added further volatility, while a robust stock market performance, spurred by AI, provided some support. Against this backdrop, the apparel industry (excluding the luxury segment) recorded revenue growth of 2% to 3%, slightly below the prior-year level (2024: 3%), while the U.S. luxury market faced particular pressure. China also faced economic headwinds driven by the ongoing property market downturn and elevated youth unemployment, which contributed to higher household savings and restrained consumption. Conditions improved only gradually, and targeted government stimulus measures provided limited support to consumer sentiment. As a result, industry growth (excluding the luxury segment) increased only slightly to 2% to 3% (2024: 2%), remaining modest compared to historical levels.