New Retailing research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 09/09/2013 -- We believe that there is long-term potential for growth in the local consumer market, but flag up short-term concerns about the impact of moderating external demand on Mexico's economic outlook, which we believe will feed through to weaker consumer confidence and weigh on private consumption.
The report examines how best to maximise returns in the Mexican retail market while minimising investment risk, and also explores the impact of sluggish US growth on the Mexican consumer and on the ability of producers and exporters to realise returns in the short term. We assess the growth and risk management strategies being employed by the leading players in the Mexican retail sector as they seek to maximise the growth opportunities offered by the local market.
Mexican per capita consumer spending is forecast to increase by 30% to 2017, compared with a regional growth average of 27%. Mexico comes third (out of seven) in BMI's Latin American Retail risk/reward ratings. Among all retail categories, over-the-counter pharmaceuticals will be the outperformer through to 2017 in growth terms, with sales expected to rise by 52.0% between 2013 and 2017, from US$2.08bn to US $3.15bn.
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In the competitive arena, BMI sees upside potential in the government having signed a decree to amend the regulation of health supplies, which should strengthen Mexico's business environment and encourage domestic industry growth. Over the last quarter, BMI has revised the following forecasts/views:
- We maintain our view that Mexico is facing a moderate economic slowdown in 2013, such that after strong real GDP growth of 3.9% in 2012, we forecast a 3.6% expansion in 2013. We see this deceleration as being driven largely by weaker US demand for the country's manufactured goods and more sluggish private consumption. Nevertheless, after weak growth H113, we expect to see a reacceleration in economic activity towards the latter half of the year. After contributing 2.3 percentages points (pp) to growth in 2012 (slightly below our 2.5pp estimate), we forecast private consumption to contribute 2.2pp in 2013, representing a moderate downward revision from our prior 2.4pp forecast. Indeed, while we expect monetary easing and cooling price pressures to boost growth in the second half of the year, household spending is likely to be weighed down in H113 by elevated inflation and weak consumer confidence.
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