If China’s economy is slowing and the world is teetering on the edge of another recession, no-one has told luxury buyers. Double-digit growth is forecast for the sector in 2012, according to Dipped In Gold, a consumer report released by Asian investment group CSLA.

CSLA estimates global luxury sales growth to reach 10-12 per cent this year - a marginal easing versus 14 per cent in 2011- with top brands expected to lead the market with a 15 per cent sales incline.

Much of this demand growth is expected to come from emerging markets. CSLA believes that currently half of total high-end sales are attributable to emerging market consumers; and present evidence to suggest a correlation between the growth of emerging markets and luxury sales.

Based on this theory, demand from emerging markets is only likely to strengthen, in view of recent forecasts by Goldman Sachs, which stated that BRICS nations – Brazil, Russia, India, China and recently-added South Africa - will account for nearly 40 per cent of global GDP by 2050.

Asia, in particular, is forecast to be a major driver of global luxury sector growth, having seen the region’s overall market expand at 22 per cent, according to consultant Bain & Co’s latest luxury market study.

China sets the pace

CSLA highlights China as being the predominant source of luxury goods buying activity, predicting a record 24 per cent growth rate for 2012, with three main factors for the country’s growing market share.

Research shows that the spending habits of the China’s ultra-wealthy are undeterred by variations in stock and property market worth, suggesting an inelasticity of demand by this social group for premium products. Findings by Hurun Research Institute support this insight - although China’s wealthy invest an average 60 per cent of their portfolio in real estate and equity, fluctuations in portfolio value had a negligible effect on luxury goods spending, which remained steady at 23-25 per cent of overall expenditure.

Demographic trends also demonstrate that the wealth is spreading across China, from the top-tier cities, such as Beijing and Shanghai, giving rise to a growing middle class. CSLA reports rising incomes of lower tier cities and booming demand for discretionary items among these populations.  A study by Hong Kong Trades Development Council further evidences this, showing that 43 per cent of shoppers expected to spend an average 3.6 per cent of their annual household income on jewellery items, are not the ultra wealthy, but those employed in services/sales, by the government or factories, or are not actively working.

Finally, a growing proportion of emerging market demand is arising from e-commerce. Luxury brands are increasingly investing in their online presence to expand their reach and target new and existing consumers, without incurring the high cost of establishing additional physical outlets. The rising response of Chinese consumers to luxe brands’ digital efforts is recorded by internet marketing agency, Digital Luxury Group, which found that China is now overtaking the US in terms of luxury watch searches, for the first time since similar studies began in 2004.

The reality is that the luxury market has, to date, only shown a modest slowdown against a more volatile global market backdrop, with the current market measuring 16 per cent above pre-financial crisis levels.