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How Will the Luxury Industry Fare in an Economic Downturn?

Do you have money sitting in an investment fund? Then you might be like millions of other investors this year who have seen a big hit on their finances. So perhaps it’s time for Plan B. 

Is there such a thing as a safe investment when the economy seems rocky? You might instinctively think the answer is no, but this guide might surprise you. 

Here, we’ll explain why your best investment right now could be in the luxury industry. Continue reading to find out why. 

The Current Economic Picture 

It’s reasonable to summarise the global economy with words like “bleak” or “concerning.” Let’s look at some key data to get a more detailed picture. 

GDP

According to Oxford Economics, GDP forecasts for 2022 hover at around 2.8% this year and 2.3% next year. In America, the data is worse, with two consecutive quarters of negative growth, the definition of an economic recession. 

Inflation

Most of us have already seen the news about soaring inflation and rising interest rates. It’s a global problem that few governments have managed to remedy.

The Stock Market

The Dow Jones has seen incredible growth in recent years and recovered strongly from the dip of the pandemic. But this year, data is starting to show a more volatile story. 

Taking these metrics together, it’s understandable why investors are nervous right now. But could the luxury industry provide a way to weather this storm? 

What Is the Luxury Industry? 

Technically, luxury products include any item that modern society would not deem necessary.

But when we talk about luxury goods today, what we mean in more precise terms is the high-end products purchased by the super wealthy – the richest 0.1% of the world. 

In this category, you’ll get expensive cars such as Aston Martin and Ferrari. You’ll also see designer clothing and accessory companies like Versace, Chanel, and Dior.

You’ll also see expensive jewelry and watch companies like Rolex and Tiffany. And you might also see costly consumables such as rare wines and whiskeys in this investment category. 

What’s the Luxury Industry Economic Forecast? 

To understand the luxury market, you need to look at what’s happening with the wealth of the super-rich. And it’s safe to say the income of the super-rich has rapidly risen in the past decade.

It also showed immunity to economic storms, such as the pandemic, that hit the average person. During Covid, the ten wealthiest individuals in the world doubled their wealth

That means the luxury market doesn’t see the same impact as everyday brands when the economy declines. 

As an investor, given the current economic forecast, it’s an intelligent choice for your money. You can find more insights here. 

Luxury Investments 

Even the most astute economic analyst cannot predict the future, which is why our financial investments often feel so stressful. But going by the data, the luxury industry looks like a great option to protect your investments in the coming twelve months. 

For more finance tips, head to our money management section to check our latest posts. 

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