Mexico Is Ready for a Takeoff in Consumer Spending, Powered by Rapid Growth in Middle-Income Households

MEXICO CITY, MEXICO--(Marketwired - Apr 28, 2015) - Mexico is poised for a long-awaited takeoff in consumer spending, powered by millions of households entering the middle class in this decade and high optimism about the future. Consumption by middle-income households is projected to increase by an average of around 7 percent annually through 2018 -- and could rise faster if a set of recent economic reforms succeeds in boosting growth. These are among the findings in a new report released today by The Boston Consulting Group (BCG).

The report, titled Is It Mexico's Moment? Preparing for the Inevitable Consumer Boom, forecasts that the number of middle-income Mexican households, defined as those earning between $1,200 and $9,000 a month, will increase by around 1.6 million by 2018, even if economic growth remains modest. These middle-income households are projected to account for around 90 percent of incremental demand in Mexico. Some of the biggest increases in spending likely will come in product categories perceived as improving quality of life, such as education, food, and private health care.

"The socioeconomic conditions are aligning for Mexico's takeoff in consumer spending," said Joel Muñiz, a BCG partner and coauthor of the report. "If the economy can deliver, it will truly be Mexico's moment."

The report notes that average Mexican consumers are unlikely to go on a spending spree soon. Indeed, interviews with more than 3,000 households across the country of all income levels by BCG's Center for Consumer and Customer Insight (CCCI) found that Mexican households remain surprisingly budget conscious. Although 77 percent of consumers surveyed said they are optimistic about the future, only 17 percent reported that they plan to increase overall spending in the year ahead. The report attributes this caution to recent tax increases and the fact that consumers are waiting to see concrete evidence that recently enacted reforms to Mexico's energy, banking, and education sectors will translate into new jobs and sustained economic growth.