Over the next decade, Latin America will see an increase in urbanization and a growing middle class, in addition to more purchasing power for women, a recent study on megatrends by Frost & Sullivan predicted.
“What we have identified is that Latin America will grow in terms of its relative importance in its role in the world economy,” Lorena Isla, Frost & Sullivan's senior research manager in Latin America, recently told Latin Business Daily.
The full study will be published in November ahead of Frost & Sullivan's conference on Growth, Innovation and Leadership to be held in early December in Miami, Florida.
Brazil and Mexico will continue as the main economies in the region, the study found.
In contrast to past volatility, “the current macroeconomic discipline in place in the region will have a long term effect," Isla said. As a result, the economies are unlikely to see depression or over-extended inflationary periods, as in past decades.
Countries such as Colombia and Peru “are starting to play a bigger role,” and all over the region the “middle class will tend to grow,” Isla said.
This will bring about growth in purchasing power and more consumption of durable goods.
Another trend observed is that Latin America will be much more concentrated in cities, compared to other regions of the world. As much as 86 percent of the population will live in urban areas by 2025, Isla said.
This will bring about developments in infrastructure, and some cities will have gross domestic products bigger than those of entire nations in the region.
Santiago, the capital of Chile, will represent 75 percent of the gross domestic product of Chile by 2025, Isla said.
The region also will see changes in the creation of “mega-corridors” of development between important cities. The corridors will experience faster economic development, including industrial complexes.
The study also predicts development of more sustainable cities such as Curitiba, Brazil and Medellin, Colombia, where citizens are much more concerned with the environment and sustainable transportation, Isla said.
“We expect that there will be 9 to ten sustainable cities in the region by 2025,” she said.
As far as the population, millennials will be at an economically active age and about a third of the population in this age group “will push economic growth," Isla said.
“We see it is a generation much friendlier to the environment," she said. "It also requires to be interconnected all the time."
Environmentally friendlier transportation systems and bigger technological infrastructures will be needed, she added.
About 47 percent of the economically active population in Latin America in 2025 will be women, and more of them will hold management positions, the study found.
This will bring a growing need for health and wellness services, or personal care, Isla said.