Boston, MA -- (SBWIRE) -- 04/16/2014 -- Peru's retail market is experiencing a period of rapid growth, which is garnering attention from a plethora of international retailers looking to break into or expand in the country. This is partly caused by a rapidly expanding middle class, with a penchant for upmarket, premium brands. The percentage of households entering the US$10,000+ wage bracket is set to rise from 41% to 61% over the 2014-2018 period, with steady population growth and a 1.6% average annual increase in the labour force bolstering demand for retail goods.
Generally positive trends in underlying economic growth, an expanding population and a steady increase in real wages are key factors behind the forecast growth in Peru's household spending on the retail sector. A growing number of working women, easier access to consumer credit, and exposure to foreign product information through the media are also likely to help the value of the retail segment increase by 44% in US$ terms between 2014 and 2018, from US$95bn to US$137bn. Peruvian per capita consumer spending is forecast to increase by 36.6% over the period, from US$3,103 in 2014 to US$4,240 in 2018. This growth in private consumption has reflected the growing degree to which Peru's lower and middle classes are able to participate in the consumer economy, with changes in consumption patterns no longer limited to the well off.
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Peruvian authorities have been working towards sustained economic growth since the era of the Washington Consensus and the results have become apparent in the past few years. Increasing GDP per capita and an ever-expanding middle class suggest that the economic gap and purchasing power disparities among the national population are shrinking. The Peruvian population is projected to grow at an annual average rate of 1.2% over the 2014-2018 period, while gross income per household is expected to grow at a notable average of 28.6% in the same period. The population is highly urbanised; rising cities such as Arequipa, Trujillo and Piura are acting as catalysts for a dynamic and competitive retail sector that presents great potential benefit to investors looking for new ventures.
The majority of Peru's population is young, active and entrepreneurial. Many young people are following trends from the developed world, breaking cultural traditions and leaving home at an early age to study and work. This early mobility has led to the creation of new households that consume more than older generation households. The young sector of the population represents the driving force behind the strong domestic demand and the national GDP, which reached US$206bn in 2014 and is forecast to rise to US $318bn by 2018.
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