The luxury goods market - which has steadily expanded for more than a decade - is expected to slip between 3 per cent and 7 per cent in 2009, to between 163 billion euros (S$312 billion) and 170 billion euros in sales, according to a new study by consultants Bain & Co presented at a conference of more than 50 top Italian luxury goods producers.

Despite the negative 2009 outlook, Bain luxury analyst Claudia D'Arpizio said long-term market drivers - including the increasing number of high net worth individuals in all regions, strongly increasing tourist flows and growing spending by working women - were still positive, meaning the luxury downturn could be relatively short.

'What I say for 2009 won't impact the long-term business outlook,' Ms D'Arpizio told the Altagamma Osservatorio conference. 'I think we should overcome this crisis and prepare to work during this year to year and half for the next step forward.'

'The impact of the financial crisis will bring some sectors into a recession,' Ms D'Arpizio said. How much and how long depends in part on how companies react. The most resilient will be those with strong international brands.

The sector, smarting already from last year's subprime crisis but not yet experiencing the full punch of the global economic meltdown, is expected to grow a relatively modest 3 per cent in 2008 to 175 billion euros. The real impact is expected to only show up in the last quarter of 2008 - with the outlook for Christmas sales and through the new year grim.

The picture could brighten if the dollar continues to strengthen against the euro. That could bring sales to between 172 billion euros and 178 billion euros - meaning anything from 2 per cent growth to 2 per cent contraction.

That would also make it 'the first time in history currencies fluctuations would have a positive impact on luxury goods market growth,' said the Bain study, which was presented on Tuesday at a conference of more than 50 top Italian luxury goods producers.

Europe remains the world's biggest luxury market, worth an estimated 67 billion euros in 2008. The United States is the biggest single country market, worth about 55 billion euros in 2008, the first year of stagnation following the post-Sept 11 crisis.

The only bright spot on the luxury horizon is luxury yachts - especially the ultra high-end of the market starting at around 15 million euros, or one-third of the sector. This is forecast to grow 18 per cent by 2010 to 4.9 billion euros from 3 billion euros in 2007.

Bain expects a weaker performance in the entry level yachting category, the 750,000 euros to 3.5 million euros range, representing 40 per cent of the luxury nautical market. Growth in that sector will be a more modest 4 per cent to 4.6 billion euros.

Bain's study of the personal luxury goods sector was based on an analysis of data collected on some 220 luxury brands from 150 companies, along with interviews. The yachting sector study looked at 50 international players. -- AP