In the coming quarters, faltering household spending is likely to feed through to persistent weakness in the large retail and services sector of the economy. Household consumption as a share of GDP will largely hold steady in the coming decade, at --.- in ---- from --.- in ----. ...Moreover, after a boom in wage growth in the last decade saw salaries outpace productivity increases, we see a slowdown ahead as companies seek to contain costs in a lower growth environment. While Colombia was previously one of our favourite consumer markets in Latin America - the country received large inflows of foreign investment in the food and drink sector over the past couple of years - its consumer outlook has steadily deteriorated for a year or so. In the coming quarters, faltering household spending is likely to feed through to persistent weakness in the large retail and services sector of the economy. We have already seen retail sales growth under substantial pressure in the first half of the year, and with consumer confidence declining (see chart below), we expect this trend will continue in the months ahead. With the commercial sector acting as the main driver of employment, weakening sales growth is likely to see a modest increase in joblessness, ending the country s steady decline in unemployment over the last decade.
...BMI View: Growth in Colombia s food and drink industry will slow over ---- due to weakened consumer purchasing power. Elevated inflation, currency depreciation and weak labour dynamics will continue to constrain household spending growth over our forecast period. Rising health-consciousness and an expanding middle class will present growth opportunities in higher value categories. Food and Drink Spending (---------) Food, sales, COPmn Non-alcoholic drinks, sales, COPmn ---- ---- ---- ----f ----f ----f ----f ----f - --,---,--- ---,---,--- ---,---,--- f = BMI forecast. Rising health-consciousness and an expanding middle class will present growth opportunities in higher value categories. ...Food and Drink Spending (---------) Food, sales, COPmn Non-alcoholic drinks, sales, COPmn ---- ---- ---- ----f ----f ----f ----f ----f - --,---,--- ---,---,--- ---,---,--- f = BMI forecast.
...Food sales (local currency) growth y-o-y in ----: +-.- ; compound annual growth rate (CAGR) ---------: +-.- . Alcoholic drinks sales (local currency) growth y-o-y in ----: +-.- ; CAGR ---------: +-.- . ...
