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SANTA CLAUS BRINGS A DIFFERENT BAG OF TOYS TO BRAZIL THIS CHRISTMAS

Extended access to credit at a lower cost for Brazilian consumers will leverage Christmas sales across unusual industries in 2007. Items that have dominated Christmas sales historically, such as clothing, shoes, cds/dvds and cosmetics, will continue to be important, but will not be the central highlight. Santa Claus this year is preparing a bigger bag to carry products such as electronics, furniture and construction materials for euphoric Brazilians escalating into higher levels of consumption.

MOVING SOUTH: WHY THE AUTOMOBILE INDUSTRY CRISIS IN THE US IS GOOD NEWS FOR MEXICO

2007 will be remembered as a historic year for the global automotive industry. For the first time the US was displaced by Japan as the number one vehicle producer in the world, while a Japanese brand, Toyota, overtook GM as the world’s largest carmaker. For the first time in a decade, US car sales will slip below the 16 million mark in 2007, a drop of 1.3% over the previous year. The US continues to be the largest market for vehicle sales, but one that is shrinking, and with a recession looming vehicles sales are not expected to recover in the short term.

LATIN AMERICA AND ASIA OPPOSITES ATTRACT?

Latin America and Asia cultural differences, geographical distance, diverse languages. Do these factors deter trade and economic relations between the two regions? This is not what the world has seen in the last couple of years, and certainly not what will happen in the future. Total trade volume has grown steadily between the two regions, reaching US$226 billion in 2006, increasing 25% over 2005. The expectation is that 2007 has seen another year of double-digit growth, and 2008 is likely to continue the trend.

LATIN CONSUMERS FIND THEIR NICHE - WHY THE REGION’S AFFLUENT WANT SOMETHING NEW

• The $90 billion net gain by the lowest 90% of the population since 2002 represents the first economic victory for the middle class in Latin America since the 1970s.

• There are twice as many households today in both Brazil and Mexico earning above $15,000 per year than in China.

• The democratization of credit in Latin America opens up a mass market for many consumer goods that previously could only be marketed to the affluent.

• The combination of an expanding viable middle class and a more segmented affluent class has opened the door for more product differentiation, a trend that is likely to deepen in coming years.