Latin America Can Count on Masses for Next Phase of Growth

Agenda-Setting Financial Insight.
Dec. 31 2012 3:55 PM

Latin America Can Count on Masses for Next Phase of Growth

103216192
Consumers are wielding newfound clout from Mexico City to Tierra del Fuego

Photo by Jemal Countess/Getty Images

Latin America can count on the masses for the next phase of growth. Though epitomized by a handful of people like the world’s richest man, Carlos Slim, and showy political leaders spearheading the region’s commodity-led export economies, a burgeoning middle class will make its mark in 2013 powering Latin America’s future.

Consumers are wielding newfound clout from Mexico City to Tierra del Fuego. The World Bank reckons some 50 million people have been lifted out of poverty in the region over the last decade, swelling the middle class ranks. That, in turn, has created millions of new borrowers. Unemployment is very low in some places while wages are rising in others.

Advertisement

Take Brazil’s $2.5 trillion economy. Despite modest GDP growth, consumers have been resilient. Sales at shopping centers may top $58 billion in 2012, the seventh consecutive annual increase, according to trade group Abrasce. A record 48 malls are expected to open in 2013. A $12 billion e-commerce business lured Amazon and Google.

Meanwhile, Mexicans are emulating their northern neighbors. The region’s second largest economy, at $1.2 trillion, is now the world’s biggest soft-drink consumer. Wal-Mart is growing twice as fast there as in the United States. The country’s new “Buen Fin” shopping campaign, modeled after America’s Black Friday, saw November sales jump 30 percent from a year ago.

That lays the groundwork for a surge. As Chile keeps inflation at bay and Colombia pursues potentially landmark peace talks with rebels, Brazil, in particular, should lead the way. It’s gearing up to host soccer’s World Cup in 2014 and the summer Olympics in 2016. The associated infrastructure spending will create jobs and enhance spending power. Combined with benchmark interest rates that recently hit an all-time low of 7.25 percent, the pieces are in place for a consumer-led boom.

The fiesta will need to be monitored. Left unchecked, households could borrow too much. Inflation is always a bubbling worry in Latin America. And the region isn’t immune from slower growth in other parts of the world. But the underlying trends suggest a coming spark for foreign investment and local markets.

Read more at Reuters Breakingviews.

TODAY IN SLATE

Frame Game

Hard Knocks

I was hit by a teacher in an East Texas public school. It taught me nothing.

Chief Justice John Roberts Says $1,000 Can’t Buy Influence in Congress. Looks Like He’s Wrong.

After This Merger, One Company Could Control One-Third of the Planet's Beer Sales

Hidden Messages in Corporate Logos

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

How Can We Investigate Potential Dangers of Fracking Without Being Alarmist?

My Year as an Abortion Doula       

  News & Politics
Weigel
Sept. 15 2014 8:56 PM The Benghazi Whistleblower Who Might Have Revealed a Massive Scandal on his Poetry Blog
  Business
Moneybox
Sept. 15 2014 7:27 PM Could IUDs Be the Next Great Weapon in the Battle Against Poverty?
  Life
Outward
Sept. 15 2014 4:38 PM What Is Straight Ice Cream?
  Double X
The XX Factor
Sept. 15 2014 1:51 PM Why Not Just Turn Campus Rape Allegations Over to the Police? Because the Police Don't Investigate.
  Slate Plus
Tv Club
Sept. 15 2014 11:38 AM The Slate Doctor Who Podcast: Episode 4  A spoiler-filled discussion of "Listen."
  Arts
Brow Beat
Sept. 15 2014 8:58 PM Lorde Does an Excellent Cover of Kanye West’s “Flashing Lights”
  Technology
Future Tense
Sept. 15 2014 4:49 PM Cheetah Robot Is Now Wireless and Gallivanting on MIT’s Campus
  Health & Science
Bad Astronomy
Sept. 15 2014 11:00 AM The Comet and the Cosmic Beehive
  Sports
Sports Nut
Sept. 15 2014 8:41 PM You’re Cut, Adrian Peterson Why fantasy football owners should release the Minnesota Vikings star.