The diamond and jewelry market, like the global economy, is sending mixed messages ahead of the holiday shopping season. The prevalent claim that the economy is showing its strongest prospects since the 2008 crash is being disputed by market volatility, geopolitical factors, currency fluctuations, an apparent slowdown in China and overall caution in the luxury segment. Meanwhile, the diamond and jewelry sector has witnessed a slowdown in the high end and a shift toward lower-quality, more affordable items.
Still, many believe that, for the first time in a while, all the major consumer markets have been well positioned this year to fuel steady jewelry demand, influencing a positive outlook for the fourth quarter season.
The U.S. gained momentum as money continued to be pumped into the economy with low interest rates encouraging investment and consumer spending. There was a concentration of wealth in the Middle East as money flowed from troubled countries to centers such as Dubai that resulted in increased consumer spending in the Emirates. China was showing improvement after a difficult year in 2013 while the country adjusted to its new leadership. India also shook off a tough 2013, with confidence restored by this year’s election of the Modi government. Even in Europe, there was a sense that the worst of the crisis was behind them.
Perhaps 2013 was a particularly difficult year, which has highlighted the positive trends that have occurred in 2014. However, events in the past weeks have unnerved market confidence.
[two_third]To start with, the various economies that make up the Euro Zone remain uncertain. Notably, economists expect the German economy – which has long been the region’s mainstay – to contract for the second straight quarter, technically placing the country in a recession, as exports declined in recent months. China’s economy grew by 7.3 percent in the third quarter, which was its weakest showing in more than five years, while concerns have arose regarding ballooning corporate debt levels. In Japan, the government recently downgraded its own assessment of the economy as companies have reduced production due to weaker consumption.[/two_third][one_third_last]
“Growth will be upheld as long as diamonds maintain their overall aspirational and emotional appeal.”
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