“I am naïve enough to think that China will come back in the not-too-distant future.”

So says, a little sheepishly, Erwan Rambourg, luxury analyst at HSBC and author of “Bling Dynasty,” the 2014 book that painted a bright picture of China as a key Eldorado for luxury goods.

To be sure, anemic demand in China and the U.S. has Europe’s big luxury groups fretting amid the biggest slowdown in 15 years, but in the meantime, there are emerging markets to consider.

“We’ve heard a lot about South Africa, Nigeria, Mexico, Indonesia and India, which all likely have strong potential for growth but from a very small base,” Rambourg said.

By contract, he cited two geographies that can “help the sector more meaningfully”: the Middle East, and certain other countries in Asia.

The former “continues to deliver on its promise, with local consumers, permanent residents and tourists alike contributing and, importantly, many new infrastructure projects that can help continue to boost awareness and appeal for the sector,” he said in an interview.

The latter refers to “emerging Chinese destinations, meaning mostly, but not only, Thailand, Cambodia, Vietnam, where economic ties are leading countries to facilitate inbound travel from China with visa restrictions easing and luxury infrastructure also being added.”

Luca Solca, luxury analyst at Bernstein, concurred that India “is still in embryonic phase,” and floated that “Iran could be interesting — if it ever opened up.”

In the meantime, he said the Middle East remains the most thriving emerging market “with the help of Russians who have transferred to Dubai.”

“Wherever you see consistent GDP growth ahead of the USA and a higher Gini factor (the degree of income inequality), that country becomes a net contributor of luxury goods consumers,” he explained.

Mohammed Abdulmagied Seddiqi, chief executive officer of luxury watch and jewelry retailer Ahmed Seddiqi, noted that exports of Swiss timepieces to the Middle East jumped 53 percent in 2024 against a global decline of more than 2 percent, citing data from the Federation of the Swiss Watch Industry.

“This is certainly apparent when we speak to clients, their passion and curiosity for luxury continues to soar,” he said. “Our focus has always been on nurturing lasting relationships with our brands and customers that stand the test of time. The establishment of events such as Dubai Watch Week and the importance of Dubai and UAE as a key hub in the region, further unites the community and provides a space for collectors and collecting clubs to engage with brands further.”

In the main luxury markets, Bernstein’s Solca forecasts a U-shaped recovery leading most likely to low-single-digit growth, “as some of the major uncertainties are reducing.”

HSBC’s Rambourg agreed that wealth creation is key for luxury goods development, but it varies from region to region.

“In the U.S., wealth is mostly tied up to equity markets. In China, it is property. In emerging markets, it will vary,” he explained. “Beyond wealth of course, it is the capacity to project a brighter future that really plays out in terms of luxury demand. You may be rich but if you trust that your economic outlook is about to deteriorate, you will be postponing purchases.”

Ultra-high net worth individuals “aren’t too worried about recessionary risks or inflationary pressures. Conversely, aspirational consumers aren’t too keen to spend 5,000 euros on a handbag these days,” he continued. “Therefore, you get an hourglass shape of consumption right now with very high-end brands still doing well and Polène, Longchamp, Coach at the other end of the spectrum being hot.”

Rambourg noted that “this polarization exists within the mega brands themselves, hence the recent success of the Giglio bag at Gucci, for instance, given it’s a much better value proposition than the rest there.”

HSBC is expecting the full-year 2025 to be “flattish” for the sector. That forecast “implies an improvement to low-single-digit positive in the second half after low-single-digit negative in the first half. The bulk of that is to come from China improving,” Rambourg noted.