Key View: In Mexico, grocery and food delivery services grew exponentially during the pandemic, as consumers stayed home amidst social restriction orders. Rising rates of urbanisation, the expansion of the middle class and high rates of mobile internet adoption will contribute to the rise of delivery services in urban centres like Mexico City. We spotlight this growing trend in the country, particularly amongst the growing middle- to high-income earners where these time-poor consumers will have the disposable income to pay a premium for home-delivery options.
We hold a positive outlook for the grocery and food delivery segment
- Risks to the stability of Argentina’s government will increase over the coming months as the fragile administration attempts to push through unpopular reforms at a time of rising political polarisation.
- Our core view is that the government will manage to hold together until the presidential election in October 2023, but that divisions within the ruling coalition will cause policymaking to progressively slow and essentially freeze by July 2023.
- While the outcome of the 2023 election is very uncertain, we doubt that the current president and vice president will stand together on a joint ticket again.
- At Fitch Solutions, we hold a positive outlook for Peru’s meat and poultry segment. Peruvian consumers portion the largest part of their household spending towards food and non-alcoholic beverages, with meat and poultry the leading category.
- Spending on both beef and poultry will outperform, with the mix of increasing mass grocery retail formalisation and improving logistical frameworks in the country supporting greater availability of meat and poultry products. Over the medium term (2022-2026), the growing level of demand will still be met by the import market, as Peru struggles to scale domestic beef production.
- At Fitch Solutions, we expect private consumption and goods export growth will underpin 6.2% real GDP growth in Colombia in 2022 and 3.2% growth in 2023, far above the 2.4% averaged between 2015 and 2019.
- Our forecast for 2022 is up from 5.8% previously, as elevated household spending and fixed capital formation contributed to a higher-than-expected growth rate of 12.6% y-o-y in H122.
- We see upside risks to our forecast, as President Gustavo Petro may increase capital and social spending beyond our current expectations, which would bolster private consumption and investment growth.
At Fitch Solutions, we forecast that
- We have become increasingly bullish on Argentina's near-term hydrocarbons production outlook. We now expect crude oil production to grow by 9.0% y-o-y (from 7.0% last quarter) and natural gas output to grow by 8.2% y-o-y (from 6.2% last quarter) in 2022.
- We highlight upside risk to our long-term upstream production forecast stemming from announced that aim to boost hydrocarbon production as well as planned investments in upstream projects and midstream capacity.
- We note however, that upstream operators in Argentina continue to face above-ground risks that weigh on sentiment.
We have become increasingly bullish on
- We have revised downwards our CAGR forecasts for Brazil's medical device market, but have revised upwards our forecasts for dental products amid an increase in dental plans.
- Political instability amid Brazil’s presidential election will continue to weigh on Brazil’s medical devices market in the short-term.
- The US is Brazil's most significant medical devices trading partner, while dental imports and exports will increase at the fastest rate.
- The recovery in the medical devices manufacturing industry post pandemic is led by initiatives to boost their domestic production.
We have revised downwards our CAGR forecasts for
We believe that EV adoption will remain nascent in the majority of LatAm markets in the short term (2022-2026) as EVs remain widely unaffordable to the majority of consumers.
While we expect the LatAm region’s EV market will significantly lag behind Asia, Europe and North America in terms of sales volume, we do expect strong low base growth over our 2022-2031 forecast period.
Breaking Latin America down into sub-regions, we expect that EV sales will remain nascent in Central America in 2022 as we believe that EVs are unaffordable to the majority of consumers in the sub-region, despite announcements by three
- Negative spill-overs from weaker 2023 growth in the US look set to weigh on Latin American markets’ momentum next year, shifting risks to our growth forecasts to the downside.
- We at Fitch Solutions have used vector autoregressions to assess how changes in US growth may affect growth in major regional economies. Our analysis shows that a 1.0% increase in the US’s GDP raises Mexico’s growth by about 0.63% in 2022, while it raises Brazil’s growth by 0.38%.
- Our analysis suggests that Mexico, Nicaragua and Costa Rica would be most impacted from lower exports to the US owing to relatively higher trade exposure to the US economy
- While Mexico’s economy will slow in 2022, to 2.0% from 4.8% in 2021, Q222 data suggest that it will hold up better than we previously thought. Indeed, we have revised our forecast up from 1.5%, and think that Mexico will outpace US growth in 2022 for the first time since 2016.
- Nevertheless, we expect that the economy will weaken in H222, dragged down by weaker US import demand and remittance inflows, high inflation and interest rates, and relatively soft private domestic investment.
- We forecast growth will slow further (to 1.7%) in 2023, and view risks as to the downside given the increasing chance that the US falls into a