Luxury growth accelerates amidst weakening sentiment across APAC in 2026

Expansion in this segment concentrates in emerging Asia as mature markets stall.

The Asia-Pacific region will remain the world’s largest and fastest-growing consumer market in 2026, but spending patterns will diverge across income groups, age cohorts, and markets, according to AP Economic Insights.

The region faces weak consumer sentiment despite economic resilience, with sentiment in Mainland China deflating below 90 in the fourth quarter of 2025 from a peak of 124.4 in mid-2021.

Taiwan and Australia also recorded unfavourable sentiment in 2025, whilst New Zealand showed partial recovery but remained below 2020–2021 levels.

Youth unemployment remains elevated in key markets. Mainland China recorded a youth jobless rate of 16.9% in November 2025. India, despite stronger hiring performance relative to global peers, is expected to see lower hiring volumes in early 2026.

Trade tensions continue to affect export-dependent economies, including Mainland China and Vietnam. Artificial intelligence (AI) is also reshaping entry-level employment in markets such as the Philippines and India.

Inflation has eased across parts of the region, but affordability concerns persist as food price base effects fade in 2026.

The report noted that consumer behaviour is shifting from concern over price increases to pressure over everyday purchasing power.

Gen Z spending is increasingly shaped by discretionary and identity-led categories, with consumers within this generation in Mainland China spending an average of $133 per month on items including plush toys, concert tickets, anime, and comics.

In Japan, nearly half of workers in their twenties engage in “oshikatsu”, which includes fandom spending on idols, anime, and related merchandise.

Housing patterns are also influencing consumption, as households with a youngest child over 16 years increased by more than 12% between 2018 and 2024 in Singapore.

Luxury consumption is shifting towards emerging markets. Mainland China is projected to record $89.8b in luxury spending in 2026, with 13% growth, whilst India is forecast to grow 20% to $22.6b.

Indonesia and Thailand are expected to reach $3.1b and $3.3b, respectively, both with double-digit growth. Japan is projected at $30.9b with flat growth.

The population aged 65 and above will exceed 15% in Mainland China and Singapore in 2026, and approach 25% in Hong Kong.

Thailand’s share will reach 16.7%, while Vietnam will approach 10%. India’s fertility rate has fallen below replacement level.

Spending amongst older consumers is rising in discretionary categories, as revenue from elderly-friendly travel and entertainment increased 20% in the first half of 2025 in Mainland China.

Fitness equipment, rehabilitation aids, and nutritional products for older consumers grew 15%, 12%, and 7%.

In Japan, senior households allocated over 11% of monthly expenditure to culture and recreation in 2024.

AI-enabled commerce is expanding across the region as adoption of generative AI stands at 34% in Australia and 37% in New Zealand amongst working-age populations.

Consumers in Singapore, Taiwan, South Korea, and Vietnam report adoption above 20%.

Businesses are integrating AI into product discovery, comparison, and purchasing processes, whilst consumer uptake depends on perceived value, privacy, and control over personal and financial data.