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Latin America is in an economic funk. Hit hard by plunging oil prices and China's dwindling hunger for raw materials, several countries, including Brazil, the region's largest economy, are in recession. But there are bright spots, including one just south of the U.S. border. NPR's Carrie Kahn reports.
CARRIE KAHN, BYLINE: Really, Mexico? The land of drug cartel violence, with the still-unsolved mass murder of 43 students and, by some estimates, where half the country lives in poverty? This is the bright spot in Latin America? It sure looked that way last week, as thousands showed up for the grand opening of one of the country's largest luxury department stores in Mexico City's swanky Polanco neighborhood.
UNIDENTIFIED MAN #1: (Speaking Spanish).
KAHN: Photographers shout to grab a shot of actresses, dignitaries and designers, all arriving at the newly remodeled 650,000-square-foot Palacio de Hierro - in English, the Iron Palace department store.
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: Waiters in tuxedos pour bottomless French champagne as guests enjoy classical music and stroll past store after store of luxury brands - Tiffany's, Dior, Gucci, Prada. Juan Manuel Rojas, who says he's in marketing, stands with friends on the bottom floor, filled with more than a dozen shops selling high-end watches.
JUAN MANUEL ROJAS: Well, it's great. This is like being in Las Vegas or New York.
: Or Europe, says Roberta Rodriguez, who owns a catering firm.
ROBERTA RODRIGUEZ: (Speaking Spanish).
: Before, she says, you had to go to the U.S. to find these brands. Now, you can stay in Mexico, and you don't have to lug back all the extra suitcases. The weak peso is curtailing trips abroad, and not just for Mexico's upper crust - less than two percent of the population. The middle class is staying put, too, spending more at home. And many are getting more dollars from relatives in the U.S. as remittances have jumped in recent months. Carlos Capistran, chief economist for Bank of America Merrill Lynch in Mexico, says all of this is adding to the spending spree.
CARLOS CAPISTRAN: It is not only sales at department stores that are booming. Actually, consumption across the country is increasing at healthy rates.
: Wal-Mart of Mexico just reported a 30 percent boost in sales. And domestic car purchases are soaring. Economist Capistran says Mexicans have more money in their pockets thanks to record-low inflation and recent economic reforms - a great feat, he says, given the drop in oil prices and other commodities.
CAPISTRAN: Mexico has proven to be a resilient economy.
: It is resilient. But there are warning signs, say analysts. Income inequality is rising, and growth is slower than expected. So is it the right time to build Latin America's largest luxury mall? Standing in the crowded Palacio de Hierro department store the day after its grand opening, Chief Marketing Officer Carlos Salcedo gives a resounding si. He says luxury retailers spent the last 10 years investing in China and Russia. They've done their research.
CARLOS SALCEDO: If you ask in Miami, Bal Harbor or in Houston or in LA, their top customers are Latin Americans.
: And Salcedo adds, Palacio has been in business since 1888. It's weathered a revolution, two World Wars and the devastating devaluations of the 1990s. He says it can handle today's economic climate. Looking around at the packed stores, it's hard to disagree. Carrie Kahn, NPR News, Mexico City. Transcript provided by NPR, Copyright NPR.
