ISTANBUL

Consumer spending in Europe, the Middle East and Africa, commonly known as EMEA, is expected to remain weak despite slowing inflation, Fitch Ratings said Thursday.

The rating agency said it expects consumer sentiment in the EMEA region to remain muted for the rest of the year, due to a slow recovery in consumer confidence and lagging wage growth.

It is expected to result in consumers being cautious in spending and leading to trade-down, or spending less money in certain product categories.

The agency said high inflation in the last two years has pressured consumers' purchasing power, resulting in intense competition and pressure on sales volumes.

"A subdued consumer environment particularly affects the lower end of luxury products as well as large-ticket discretionary items, leaving limited pricing power for the latter," it said in a statement. "Segments of staple products, wellbeing, personal care, beauty and other essential items continue to show stronger sales resilience."

Fitch said it forecasts low- to mid- single-digit revenue growth in the consumer products sector in 2024.

"Companies with greater exposure to emerging markets are likely to see higher sales growth due to stronger fundamentals," it added.