"Mexico Retail Report Q1 2014" is now available at Fast Market Research

In 2014, we believe that declining unemployment, which we forecast to fall from 5.2% in August to 4.2% by the end of next year, combined with an overall improvement in economic activity, as the US economy also picks up, will lead to stronger household spending in Mexico.

We maintain our Mexico real GDP growth forecast of 2.3% in 2013 and 3.5% in 2014, compared to 3.8% in 2012. Real private consumption has held up relatively well despite the weakening of the overall economy in H113, and we expect household spending to pick up over the coming months. In addition, we believe President Enrique Pena Nieto's reforms will attract significant investment over the coming years.

Full Report Details at
- http://www.fastmr.com/prod/760710_mexico_retail_report_q1_2014.aspx?afid=302

We believe that while the recent string of hurricanes poses a downside risk for growth in Q313, the Mexican economy will sustain a broad recovery through the end of the year, after a weak performance in H113, and accelerate at a robust pace in 2014. The main drivers of growth over the coming years will be household spending, which has held up relatively well this year despite unfavourable economic conditions, and stronger exports, driven by greater demand from a strengthening US consumer.

Rising incomes and a large unbanked population point to a robust expansion of retail banking services in Latin American over the coming years. Mexico stands out as particularly well placed for rapid growth in consumer banking services. However, near-term challenges, such as weaker economic growth and rising interest rates, will impede more rapid asset growth over the next two years. Moreover, long-term growth of the retail banking sector in Latin America will be contingent on overcoming key structural obstacles such as a large informal economy and a lack of trust in financial institutions among household.

Increasing affluence, a growing population - including a large number of young people - and the continuing development of organised retail infrastructure are key factors behind the forecast growth in Mexico's retail sales. Additional factors, such as a greater number of women working, an increase in the number of formal sector jobs, rises in real wages and easier access to consumer credit, are likely to result in the value of the retail segment increasing by 17.4% (in local currency terms) between 2013 and 2017, from MXN2.67trn (US$210.06bn) to MXN3.13trn (US$263.31bn). South American markets are increasingly attractive to foreign companies because of their 'very healthy' retail spending and large urban populations with rising disposable incomes.

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