Morgan Stanley Sees Selective LatAm Retail Growth in 2026

Key Report Findings

Morgan Stanley projects selective growth for the Latin American retail and eCommerce sectors in 2026. The investment bank suggests that while monetary policy tailwinds exist, a broad-based recovery is unlikely due to underlying economic pressures. The firm's analysis prioritizes company-specific performance over general market trends.

Regional Economic Outlook

The forecast is supported by anticipated rate cuts in Brazil, which are expected to provide some relief to the retail sector. However, this positive factor is counteracted by weak overall consumption. Morgan Stanley anticipates real consumption growth in Brazil to slow to under 1%, as high interest rates and decelerating wage growth continue to suppress consumer demand.

Investment Strategy Implications

Given the challenging macroeconomic environment, the bank advises a strategic approach focused on stock-specific drivers. This indicates that certain companies may outperform the general market due to unique strengths or operational efficiencies, while the sector as a whole faces limited growth prospects. Investors are guided to look beyond top-down consumption trends.

Concluding Outlook

The outlook for Latin American retail remains mixed. While opportunities for growth exist at the individual company level, macroeconomic headwinds, particularly weak consumer spending in key markets like Brazil, will continue to temper the sector's overall performance through 2026.

FAQ

Q: What is Morgan Stanley's forecast for LatAm retail?
A: The bank forecasts selective growth in 2026, favoring companies with strong individual drivers rather than a widespread market recovery.

Q: Why is consumption in Brazil expected to slow?
A: Consumption is expected to slow due to the impact of still-high interest rates and a deceleration in wage mass growth.

Source: Investing.com