The diamond industry is encouraged by prospects of stronger economic growth in 2014. The year has started with positive sentiment in the polished market and steady activity in rough that has brought renewed optimism to the trade. There is a sense that the five-year recovery from the 2008 downturn has finally taken hold.
Both the World Bank and the International Monetary Fund (IMF) upped their forecasts for the year predicting that growth will be driven by a recovery in advanced economies.
That wealthy countries are turning a corner is welcome news for a diamond industry that relies so heavily on stability in the U.S. and Europe. Much of the positive sentiment this January stems from reports that Christmas was satisfactory in the West amid the caution in emerging markets. Now there are some economic forecasts to back it up and spur confidence.
The World Bank last week projected that global gross domestic product (GDP) will grow 3.2 percent in 2014, from its estimated 2.4 percent growth last year. Similarly, the IMF this week forecasted 3.7 percent growth in 2014, up from 3 percent in 2013.
[two_third]JimYongKim,WorldBankGroup president, explained, “The perfor- mance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead.” Rising demand in the U.S. and Europe will support export markets such as China and India.[/two_third]
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“More importantly, diamond dealers and jewelers should be careful not to over finance their inventory.”
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