Bain & Company's fourth annual report on the global diamond industry talks about the expected increase in demand for diamonds, but also warns that insufficient financing of small and medium-sized diamond businesses can hamper the development of the entire industry.
Unstable indicators of the diamond market in the last few years have finally leveled off by 2013, the market grew by 2-4%. In the next decade, demand should remain stably high, of course, if the industry cope with demand. However, macroeconomic uncertainty, the challenges facing the industry as a whole, and the shrinking financing by banks of mostly small and medium-sized players in the diamond market can have a negative impact on subsequent growth. This is reported in the fourth annual report on the global diamond industry, issued by Bain & Company with the assistance of the Antwerp World Diamond Center (AWDC).
In the study Bain & Co. the data on the main centers of growth of the world diamond industry - the USA, China and India - are given. The US once again takes a firm position as the world leader in retail diamond sales, while India and China are leaders in cutting stones and producing diamond jewelry, respectively. But even these markets, like the entire global diamond industry, will be subject to macroeconomic uncertainty and increasingly relevant diamond demand problems.
The proprietary forecasting method used by Bain & Company suggests that demand for diamonds will grow by an average of 4-5% per year over the next decade. The diamond production could reach 163 million carats by 2019, which is less than the pre-crisis 2005 value of 177 million carats, but similar to the 2008 figure.
In addition to these factors, the industry faces other problems, and one of the main ones is a reduction in funding for all areas of diamond small and medium-sized businesses. In the new market conditions, many traditional "diamond" banks have reduced the financing of the industry. The financing levels may drop by $ 3 billion in the medium term.
"To benefit from the opportunities offered by the diamond market in the coming decade, all major players in the diamond market, banks and diamantaires, need to change their business model, which may include transparency in doing business for small and medium-sized diamond businesses and improving interaction between ordinary commercial and traditionally "diamond" banks, "said Olya Linde, lead author of the analytical report and partner of Bain & Company.
"Representatives of the Antwerp World Diamond Center were pleased to offer their assistance in creating the fourth consecutive detailed report that will help the major players in the diamond market to judge the state of the diamond industry in the world," says AWDC CEO Ari Epstein.