ANALYSIS

Perspectives for Colombia’s consumer market

The expansion rate of the disposable income and expenditure per capita has been decelerate considerably

Perspectives for Colombia’s consumer market

This has been the result of the country’s economic deceleration over the past few years. Nevertheless, the next steps in the implementation of the peace agreement are expected to drive the consumer market. Due to this, a considerable growth of the Colombian middle class, in the long term, is expected to occur. In theory, this should help reduce the income gap found within the nation.  

Colombia is the fourth largest consumer market in Latin America, where its expending has continued to gain ground as a fundamental element of the local economy. Under these conditions, the nation’s middle class is expected to grow in size, leading to the reduction of poverty. Within this betterment, and following world and regional trends, the fastest growing economic category to see improvements will be Communications.

Nevertheless, the country has to face several weaknesses and assess threats to its stabilization potential and further growth. The income gap in Colombia continues to be one of the widest in the world. And so, continues to be one of the biggest and most important challenges for the country in terms of economic development and growth.

Besides the income gap, the recent deceleration may continue to have negative impacts in the consumer market for next year. Which, along the fiscal deficit that the government tried to solve through a tax reform, that was a lot less ambitious than what was proposed by as stated by experts, has managed to increase the country’s risk throughout 2017.

The importance of the Middle Class for the years to come

Despite improvements on income inequality over the last years, there is still a noticeable gap between the conditions of rural and urban households. In this situation, according to Euromonitor, it is expected that 17 million Colombians will be part of the middle class by 2030.

With this increase in Colombian middle class, their salary will also raise and so will their purchasing power. At the same time, the percentage of money destined towards basic needs will decrease and there will be a substantial increase in household’s disposable income.

 

Latin American Post | Juan Sebastián Rojas

Copy edited by Susana Cicchetto

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