Outlook Positive For Diamond Markets

On December 2nd, 2011, Bain and Company, a global marketing consulting firm with a prestigious reputation, released a report projecting the future demand and supply of diamonds. This projection concluded tremendously positive for the diamond industry. Bain and Company predicts that the demand for diamonds is to increase by 6 to 7 percent ever year between 2010 and 2020, while the supply is to increase by only 2 to 3 percent each of those years.

There are several factors that are to contribute to this steady rise in demand, the primary being the increase of Chinese and Indian markets. The middle class in each of these countries has already shown substantial growth, and is expected to double in size in the near future. As the general population becomes more and more prosperous, their consumption of diamonds will also rise. Along with the economic recoveries of the highly developed countries, the thriving Chinese and Indian markets are projected to greatly stimulate the demand for diamonds over the next decade.

There are only a few unlikely scenarios that could effect the report’s projections. The most serious potential setback is the possibility of a severe economic global recession. Considering their current debit crises, the economic outlook for Europe and America remains unclear. A major global recession could slow the growth of the demand for diamonds, but this scenario is considered highly unlikely.

This economic uncertainty may actually be a blessing, as well as a curse, for the diamond industry. These insecurities within the economy may help strengthen the investment market for diamonds. Many people are looking to diamond investments as more reliable than their national currency. Diamonds present an investment opportunity that shows a primarily positive outlook, something many investors have been seeking for quite some time now.

As the supply growth of diamonds is surpassed by the growth in demand, the value and prices of diamonds are sure to experience significant increases. Buyers who are in the market for diamonds under 2 carats will be most noticeably affected by the price increase. The increase could potentially price diamonds out of range for many lower-budgeted consumers. The wealthy that specialize in larger, 2 carat and beyond, diamonds, should not be as greatly financially affected by the change.