‘Opportunities’ for luxury sector despite ‘volatile’ year ahead

The executive editor of The Economist has warned of a “volatile” year ahead but said there would be “opportunities” for those in the luxury sector.

Daniel Franklin encouraged brands to “fasten [their] seatbelts” as they go into 2023, citing the war between Russia and Ukraine, the after-effects of the pandemic, rising inflation and political instability as key factors driving current turbulence.

“I wish I could stand here and be tremendously upbeat and cheerful for you but I’m afraid that’s not what you’re going to get. Volatility is probably the word that is going to best sum up the year ahead as we go into it,” he said.

“We've got a major war on in Europe, the worst since the Second World War. The pandemic, which is not what it was but it's not completely gone and we still have to be mindful of it. It's going to no doubt wax and wane and there are still parts of the world that are experiencing lockdowns and severe disruptions.

“We have inflation such as we haven't known for a very long time, and some people have never known, and a lot of political uncertainty around. So fasten your seat belts as you go into 2023.”

Speaking at the UltraTravel Forum at Pan Pacific London on Monday (October 31), Franklin said the recession would “get worse” in 2023 with global growth of only 1.5%. He also highlighted Donald Trump potentially running for presidency again in the US, China becoming “increasingly assertive abroad”, India overtaking China as the world’s most populous country and ongoing environmental threats as reasons for uncertainty.

However, Franklin maintained “in volatility there is always opportunity for some” and said this was particularly relevant for the luxury sector.

“There is, and this particularly affects the luxury industry, a sense of carpe diem – a legacy partly of the pandemic, when people weren't able in most cases to travel as they've grown accustomed to and had a much keener sense of existential threat, but also a legacy of war and a sense of ‘who knows what's just around the corner?’ because life's uncertain.

“A lot of people I think conclude from this: ‘I want to do that thing now because I don't know what's going to be happening tomorrow.’ And at the luxury end of things all the more so. Why put off that decision if I can afford it? If I can afford it, I'm going to do that sooner rather than later. So I would suggest that this very volatility almost reinforces a sense of opportunity in some sectors of the market.”