Amid luxury's struggles elsewhere in South and Central America, Mexico and its capital continue to grow.

MEXICO CITY — Latin America’s luxury market is suffering from sluggish demand throughout South and Central America while the collapse of Panama’s Grupo Wisa is forcing brands to restructure to stem losses.

“Mexico is the only solid market,” said Diego Stecchi, managing partner at industry consultancy Luxury Retail Partners. “The rest, including Colombia, Panama and Brazil, are all suffering and consolidating. Some [brands] are closing stores.”

Hurt by falling commodity prices, the region’s once high-flying economy is expected to shrink 0.4 percent in 2016. Brazil is in tatters, with gross domestic product set to fall 3.5 percent, while Argentina is seen declining 1.5 percent. Meanwhile, Colombia’s economy is stalling and facing inflationary headwinds.

Amid the downturn, designer apparel, footwear, leather goods and accessories sales are expected to slow, growing 4 percent to about $15 billion this year — but sharply down from an 11 percent hike last year, Euromonitor analyst Fflur Roberts forecast. When factoring in other products and services such as yachts and travel, the market is worth nearly $30 billion, according to Abelardo Marcondes, chief executive officer of regional consultancy Luxury Lab.

Argentina is expected to contract sharply for 2016 due to slowing jewelry, watches and accessories sales and hurt by lingering negativity over former President Cristina Fernández de Kirchner’s socialist policies, which prompted many labels to exit Latin America’s third-largest economy.

“She basically wanted everyone operating in Argentina to contribute to the economy,” Roberts said. “If Cartier wanted to sell a watch, it had to do some manufacturing in Argentina. Ninety-nine percent of luxury brands left.”

New Argentine President Mauricio Macri has rebooted the economy, ending Kirchner-era dollar restrictions and protectionism, so Roberts expects sales will begin to gradually improve.

Marcondes was more enthusiastic, noting many European and U.S. brands are eyeing a return to the market, especially since economic growth is forecast to rebound in 2017 as Macri boosts foreign investment.

“Brands had huge problems with their bank accounts because they could not buy dollars or do wire transfers,” Marcondes pointed out. But Macri’s fledgling policies “are breathing optimism into the market and I expect a lot of store openings this year and next,” he added.

According to Stecchi, brands including Prada, Louis Vuitton, Dolce & Gabbana and Tiffany are looking to reopen in Argentina. However, good retail space is scarce, save for Buenos Aires’ high-end Patio Bullrich and other smaller locations.

“Everyone [the brands] is looking but few have defined or confirmed anything,” Stecchi said, adding that some trademarks postponing their comeback until next year.

Argentina apart, all eyes are on Panama, where sales are plunging as franchising monopoly Grupo Wisa collapses under a U.S. money laundering investigation that is having ripple effects across Central America and Colombia.

In May, the U.S. Treasury’s Office of Foreign Assets Control charged Wisa’s owner and president Abdul Waked and his nephew, Nidal Waked, of laundering for international drug cartels, seizing its assets and barring U.S. entities from conducting business with them.

Grupo Wisa denied the indictment, calling it “untrue and unfounded” and has countersued in the U.S.

Meanwhile, U.S.-appointed trustees ordered the firm’s crown jewels — department-store Felix and the upscale Soho Mall — to be sold. Panamanian-Honduran group FBM Retail bought Felix in November for an undisclosed amount. FBM Retail Corp. is owned by Panamanian pharmacy operator Grupo Arrocha and Honduras department store chain Diunsa.

Meanwhile, Bal Harbour Shops is mulling offering roughly $350 million for Soho Mall, as reported, joining several other suitors from Panama, Brazil and the U.S. The final bids were expected before Dec. 31.

The assets on the block include the 100-store mall, home to the likes of Salvatore Ferragamo and Louis Vuitton and located in Panama City’s chic “Golden Mile” financial district. The group also features three high-end office towers, two of which were being built to host Central America’s first Ritz Carlton and a casino by Spain’s Egasa, and which now sit idle.

Brands are anxiously awaiting the sale. The U.S. trustees allowed the mall to stay open until January, but OFAC recently gave Soho Mall another two months to operate so a deal can be concluded. Meanwhile, it has banned merchandise imports, sources said, adding that the site also needs an $80 million face-lift to better compete with rival Multiplaza.

“All they can do is reduce their operation or close down,” said one executive who is closely following the sale, but who requested anonymity, of the labels operating in the 355,000-square-foot facility, which is also home to Chanel, Prada and Bottega Veneta, among other brands.

Some firms are more vested in the mall than others.

“Vuitton cannot just close and open somewhere else,” the executive added. “They will lose their entire year of activity and the same goes for Prada. They need to find a buyer ASAP, but it won’t be easy. Soho competes with Multiplaza, which is very strong.”

Vuitton is the strongest brand in terms of sales in Latin America, Stecchi said, followed by Tiffany, Cartier, Salvatore Ferragamo and Ermenegildo Zegna. The five brands boast the strongest regional networks, with growing franchises in Mexico, Brazil and Colombia. Hugo Boss and Burberry also run leading franchises, while Michael Kors, Kate Spade, Tory Burch and Spain’s Desigual have expanded in recent years.

One top brand that has been slow to expand in the region, however, is LVMH Louis Vuitton Moët Hennessy’s Spanish label Loewe, Stecchi said. Gucci, Prada and Chanel have also been slow to build their market presence, he added.

Panama City-based Wisa also had distribution deals for luxury brands in Panama, Colombia and Central America, though its exact reach remains undisclosed. Many of the names — including the likes of Jimmy Choo, Saint Laurent, Burberry and Spain’s Mango — are scrambling to find new franchisers or considering a temporary departure from the market, according to the executive who requested anonymity.

Wisa’s other flagship business — luxury perfumery La Riviera — is unwinding amid plunging sales and has closed 12 shops, the family’s lawyer, Ebrahim Asvat, told the local Telemetro newspaper.

La Riviera will shutter its 90-strong Colombian network and close doors in Guatemala and other Central American nations, Wisa has said. However, it has remained tight-lipped about how it will pursue the process. Grupo Wisa spokesman Juan Luis Correa did not return calls seeking comment.

La Riviera carried major international beauty labels including Chanel, Ferragamo, Estée Lauder, Coty, L’Oréal and Spain’s Puig.

As it dismantles, rival duty-free chains such as Dufry are taking over airport and other concessions in Panama and Colombia, said the executive. Because La Riviera had a market stronghold, the international brands are struggling to find other similarly strong distributors, he added.

One possibility is Prebel, a Colombian beauty wholesaler that recently launched a perfumery chain called Beautyholics. Stocking roughly 1,500 items per store, the chain will specialize in makeup and personal care, carrying brands such as Max Factor, QVS and Wella, as well as Prebel’s private labels, Nude and Vitu.

“We are natural allies of many of La Riviera’s customers [i.e., Coty or Estée Lauder],” said Prebel’s marketing vice president Catalina Restrepo, adding that Prebel is already in talks over the potential acquisition of brand distribution deals in the region. However, local rivals Belleza Express and Fedco are also said to be courting potential business.

Whatever happens, the U.S. inquiry is “basically destroying Wisa,” the executive said. “This is coming at a time when the luxury market is very difficult in Panama, Central America and Colombia. It’s a grave problem.”

Luxury brands may get a break from an unlikely place: Brazil.

Despite its deep recession, Euromonitor’s Roberts believes the country’s luxury market grew 3.6 percent in 2016 from a 1.7 percent decline in 2015. This is mainly because of the real’s plunge against the dollar, which is encouraging Brazilians to shop more at home and less in Miami and New York, as they have traditionally.

Because local prices are usually higher, some established and well-managed brands are striking a windfall from the “stay-at-home effect,” added Stecchi, though he cautioned Roberts’ estimate seemed a bit too bullish.

“I think the market will be flat,” he predicted. “Some of the strong brands had imported a lot and could invest in their image so they have sold more. However, the smaller ones haven’t had that opportunity.”

Despite its own struggling economy, Mexico remains the region’s darling, with sales expected to surge 8 percent amid a strong luxury appetite and new and massive retail offerings such as posh department-store chain El Palacio de Hierro’s enlarged store in Mexico City’s Polanco quarter.

Marcondes was sanguine about digital sales in Latin America’s second-largest market, saying they are surging and could have gained 50 percent in 2016.

“Consumers are confident, brands have a better understanding of customers’ needs and many platforms are offering nice products,” he said.

Lacoste is also upping the stakes with plans to open 30 points of sale in Mexico to take its count to nearly 300 by 2019, said chief executive officer Marco Gelosi, adding that the French fashion brand intends to install four stand-alone stores and 26 department-store corners by then. It will also spend $2 million to remodel seven shops, broaden its merchandise offer and introduce e-commerce in 2017.

But the market could suffer from soon-to-be U.S. President Donald Trump’s proposal to possibly expel millions of Mexican illegal immigrants and slap tariffs on Mexican goods — potentially dealing a double whammy to the already tough economy. Moody’s recently downgraded its 2017 GDP estimate for the country to 1.9 percent from 2.5 percent.

Some also see a credit bubble as many department stores and retailers keep stretching their store-card offerings to seemingly ludicrous terms.

“There are some concerns that the middle class’s credit access could run out,” Roberts noted. “However, incomes continue to rise and could balance this out. The luxury industry is barely scratching the surface in Mexico.”