The push of Chinese consumption is diluting the power of the Middle East, where Dubai is the only market with a slightly positive trend.
Luxury redefines its global map. The sector is currently tracing the lines of a new tendency of global consumption, with China leading the growth, while the countries of the Middle East are beginning to lose ground, with the exception of Dubai. Tourism is no longer the driving force that pushed the countries of the Middle East to dominate the consumption within the luxury market. While the spending of tourists in these countries has been weak, the Chinese consumer has continued to build muscle and reaffirm itself as the world's largest consumer of luxury, as collected by Bain&Company in its report Luxury Goods Worldwide Market Study.
In the first quarter of 2019, China once again led the consumption of luxury in Asia. The continent was the one experiencing the greatest growth, boosted by the impulse of the national consumer. Only Hong Kong and Macao lost ground regarding other territories of the country. The forecast for the rest of the year is even more optimistic. The harmonization of prices and the predisposition of the population to consume, especially among the younger generations, will boost domestic consumption, which will lead luxury to grow in the country between 18% and 20%.
On the other side there is the Middle East. Dubai was the only market in the region that experienced an increase, although it was mild. On the other hand, Qatar and Saudi Arabia showed a poor performance, weighed down by the weak spending of tourism in their territories. For the rest of the year, uncertainty is confirmed within the Middle East. Internal consumer spending will flow to other regions, and only the ecommerce will maintain a positive trend.
China is the country that mainly leads the growth of luxury consumption in Asia, while the countries of the Middle East have seen their weight reduced on the global map
On the other hand, the rest of Asia will obtain a growth of between 10% and 12%, not as pronounced as that of mainland China. The regions of Hong Kong and Macao will confirm their negative tendency for the rest of 2019, due to the reduction of tourism spending, mainly from China. Likewise, the increase in the purchasing power of the middle classes will put Indonesia, the Philippines and Vietnam on the spotlight of luxury consumption, as well as South Korea, which is stabilized thanks to the national buyer.
The strength of the Chinese consumer also reaches Japan. The country has seen how tourists from China have helped to maintain a moderate growth of luxury consumption in the Japanese country in the first quarter of 2019. The push will be even greater for the rest of the year, between 2% and 4%, due to the proximity of the Olympic Games of Tokyo 2020, which will boost the arrival of interested tourists.
However, the Chinese tourist is beginning to stop visiting the American continent. Despite this, domestic luxury consumption has maintained a promising growth in the beginning of 2019. By countries, the United States will maintain the upwards trend, thanks to the national consumer and the arrival of tourists from Mexico and Brazil. Precisely Mexico will also experience a rise in luxury consumption, alongside with Canada, with an eye focused on how the trade war between China and the United States will affect the market.
In Europe, for its part, the tendency of the first quarter of 2019 have seen little growth in luxury consumption, due to lower tourism spending in markets such as the United Kingdom and France. The difference between regions will increase throughout the rest of the year, as uncertainty stands over the continent's economy, especially in the United Kingdom, where the development of Brexit may impact on the confidence of local consumers when it comes to consume luxury.