Diamonds sell less, consumers don’t buy

Another sign of a possible decline in consumption is manifesting itself in India, recognized as the main center of gems in the world. The country is preparing for a challenging year as demand for diamonds from key markets in North America and Asia is expected to ease.

According to Bloomberg, citing a new report from the Gem & Jewelery Export Promotion Council, India saw a 10% decline in exports of cut and polished diamonds of $22 billion in the fiscal year ending in March due to especially of the inconsistent supply of Russian rough diamonds and the drop in demand in the United States and China.

Vipul Shah, chairman of the state-backed industry group, spoke to Bloomberg TV on Wednesday about deteriorating demand for diamonds in major global markets:

" It's going to be a tough year ," said Shah. High inflationary pressures in the US, China's slower-than-expected recovery after pandemic restrictions were lifted and volatility in gold prices will make the situation “ difficult and challenging ” for Indian diamond traders.

“ Supply is also one of the constraints ,” while factories in the nerve center of Surat in Gujarat state have been slow to build up inventories, with work shifts staggered in light of weak demand, Shah said.

India, which considers Moscow a close political and trading partner, imports oil, arms and basic products from Russia despite the threat of sanctions over the war in Ukraine. Shah's group is in talks with the Indian government to resolve a payment issue related to its procurement of rough gemstones from Russia. However, the biggest challenge for the industry is waiting for "the recovery of the US economy and consumer demand," said Shah. —Bloomberg

India's monetary problem with Russia is linked to the fact that there is no balance between Russian and Indian exports, so Moscow risks finding itself with useless stocks of Rupees because there is nothing to buy in India for the market Russian.

Another sign that consumers in the world's largest economy may be under pressure is last month's report from French luxury group LVMH, which highlighted a "slight slowdown" in luxury spending in the first quarter.

The slowdown in luxury spending comes as the seemingly invincible US consumer begins to sag, first at the low end (as we explained two months ago in “Early Signs of a Notable Slowdown in Low Incomes”) and now at the high end.

We recently published an article where data relating to credit card purchases released by BAML showed a marked slowdown in purchases by US consumers, especially those with higher incomes.

And what are the first things consumers cut back on spending when macroeconomic winds kick in? Jewelery and other forms of luxury spending.

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The article Diamonds sell less, consumers don't buy comes from Scenari Economics .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/i-diamanti-si-vendono-meno-i-consumatori-non-comprano/ on Fri, 19 May 2023 09:00:04 +0000.