Sales in the luxury market is expected to slow to around 5 percent this year as affluent Chinese shoppers cut back on their spending and concerns over the global financial crisis take its toll on shoppers elsewhere.

Chinese big spenders - the industry's main engine of growth - are showing signs of slowing down, according to a report published today by business consultants Bain & Co and Italian luxury goods trade body Fondazione Altagamma,

This year, the mainland Chinese market, excluding Hong Kong and Macau, is expected to grow about 18 per cent after jumps of 30 per cent and 35 per cent of the past two years.

According to the report, Chinese consumers are generally spending less and a crackdown on corruption has dented luxury spending in China.

At the same time, the report suggests that fewer gifts are handed out as Chinese consumers await the imminent leadership change in Beijing.

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Despite the slowdown in China, Bain is forecasting annual global growth in the personal luxury goods market of 4 percent to 6 percent through 2015 when it is expected to be worth a quarter of a trillion euros.

This year, the value of the total luxury goods market is expected to rise 5 per cent at constant exchange rates to 212 billion euros.

That would be the third straight year of growth following two years of contraction in 2008 and 2009 when many countries around the world slid into a deep recession following a banking crisis.

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Claudia D'Aprizio, a Bain partner and lead author of the report, said "concerns about market weakness are somewhat overblown."

She added:

Fundamentals for growth remain strong, but it's going to be a bumpy ride.

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