Western luxury brands cut their global sales forecasts for the year, driven largely by cooling Chinese demand.
Though the Chinese market has become one of the world’s largest for luxury goods, spending has cooled since the start of the decade, driven largely by a slowing real estate market. Meanwhile, China’s scant social spending has forced much of the country’s aging population to save, further hurting domestic consumption.
Though Chinese exports remain strong — it registered a record trade surplus last year — its shrinking domestic market is a concern, the International Monetary Fund said. If China is to meet its ambitious growth targets, Beijing will need to shift spending from industrial subsidies, which are creating deflationary pressures, to boosting the social safety net.
