If economists are to be believed, some of the biggest economies on the planet are heading for recession. Recessions traditionally do not bode well for retailers and companies reliant on consumer spending. That is except for those who play in the luxury end of the pool, a sector which new research suggests has thus far barely appeared to have noticed that the world is currently in the grip of a credit crunch.

To understand the dynamics of the luxury sector one has to look at the rise of the number of high net worth individuals. Consulting group Cap Gemini's authoritive World Wealth Report, shows that there was a 12.2% rise in the number of millionaires in Latin America in 2007, a 8.7% increase in Asia' a 15.6% jump in the Middle East and a 10% leap in Africa.

And in spite of the global credit crisis, last year also saw a leap in the wealth of the wealthy as well. The wealthy in Latin America saw their wealth grow by 20.4%, Middle East by 17.5%, Africa by 14.9% and Asia by 12.5%.

Commenting on the numbers, Chris Gant, head of wealth management at the consulting group said: “Even as financial market turmoil impacted the United States during the second half of the year, luxury goods makers, high-end services providers, and auction houses all found ready clients in the emerging markets of the world – most notably, China, India, Russia and the Middle East – thereby sustaining their own growth."

In fact the millionaires of just the four BRIC nations - Brazil, Russia, India and China - accounted for almost one fifth of all new millionaires in 2007. It is the buying habits of the newly wealthy which is driving the performance of luxury groups. Consultants Ernst & Young estimate that sales of luxury goods in China, alone, will rise by 20% this year.

"Luxury goods makers, high-end services providers, and auction houses all found ready clients in the emerging markets of the world – most notably, China, India, Russia and the Middle East – thereby sustaining their own growth," Chris Gant, Gap Gemini

Boys toys

Italian car maker Ferrari sales volumes typify Grant's point. Its sales increased by 47.2% in the Asia-Pacific region and 32.3% in the Middle East, last year. Yacht brokers revealed that 20% of all orders for boats over 200 feet in length are currently being placed by Russians.

Demand for business and private jets is also soaring. According to a report by Honeywell Aerospace, around 1,300 business jets are scheduled to be delivered this year, up from 861 in 2006. The report also said that there is now at least a two-year waiting list for certain models of jet. Cessna, which makes the Mustang private jet, has a waiting list which runs into 2011.

Something for the ladies

It is not just these traditionally male sub-sectors which are being boosted by the rise of so-called emerging market wealth. LVMH, which makes everything from Louis Vuiton handbags to Dom Perignon also credited these new millionaires for its 8% increase in profits last year. While in earlier this year the Financial Times revealed that Cartier and Versace were in talks to open stores in India.

Extending the notion of a luxury brand to include those which provide services rather than goods is another way to tap into the growth potential of the emerging markets' new wealthy elite. You might not think of them a “labels" but Christie's International and Sotheby's had combined Russian sales totalling £162.6 million last year, a 45% jump on 2006.

"Our new tours are truly unrivalled in terms of luxury and experiences, we arrange incredible activities," Artisans of Leisure"

Providers of high end holidays are also thriving. Wealthy Indian tourists are already more valuable to London as a group than those of Japan, the former spending £139 million in 2007 compared to the £123 million spend of the latter.

Evolution at the top end of the holiday market is also proving profitable for companies who organise “unique" trips, such Artisans of Leisure who can arrange activities from stopping by the house of a leading folk art collector in Lima on the way to Machu Picchu, to having a private driver take you on a tour of traditional Andean villages in northwest Argentina.

Private residence clubs for the wealthy, such as The Hideaways Club, are also popping up in increasing numbers. As is Philanthropic travel, as the wealthy seek to give back while on holiday.

Know your luxury, from your luxury

Experts caution that not all luxury groups are positioned to prosper from the predicted growth in wealthy individuals from emerging markets, which means that anyone considering plumping for one of the so-called luxury funds which have sprung up in the last few years should consider its underlying investments very carefully. Likewise, returns from a luxury index might not capture the full upside of the companies who have captured the imagination and wallets of the newly affluent.

*The companies mentioned in this piece are for trend illustrative purposes only and do not constitute any recommendation to buy.

By Lindsey Rogerson