What: The luxury market is expected to see a sharp slowdown in Latin America this year as inflation and slow economic growth hit sales of high-end products.

Why it is important: Mexico is expected to continue to lead the region, with multiple global luxury brands entering the market and opening new stores.

Mexico is expected to gain 10% as a result of its strong tourism industry and rising Chinese foreign direct investment (FDI) which will bolster employment and consumption. With the US imposing restrictions on China’s imports, many firms are investing in border-town factories to service the market.

Additionally, brands such as Fendi and Dolce & Gabbana have opened new flagship stores in Mexico, stating that the Mexican market has grown both qualitatively and quantitatively in recent years.

Business is not looking as positive in the rest of Latin America, as Brazil’s growth is forecast to increase by only 3% until 2025 and retail sales only rose 1% in 2022. Luxury brands in Argentina have been struggling for years and all the top brands have exited the country.

Premium labels are selling well in Colombia as the US dollar is currently strong against the peso, encouraging foreign investment and tourism. However, the luxury market won’t be able to sutain that growth for much longer as import taxes are increasing and wealthy Colombians shop internationally.

Latin America’s luxury sales drop after two-year boom