NOVEMBER/22
BRAZILIAN ECONOMY.........................................................................2 IMPORTANT DATA.................................................................................3 LATIN AMERICA MACRO DATA..............................................................3 CONFIDENCE INDEXES..........................................................................4
TRAVEL INDUSTRY ............................................................................5
MAIN FACTS The ghost of inflation still haunts the great economies in the world. In Germany, prices rise, on average 10%, the highest threshold in 70 years. In the United States, the inflation accumulates an increase of 7.7%, slightly below the accrued for the last months, which reached 9.1% in June. In South America, the picture is also preoccupying, with inflation gaining force in Colombia and exceeding 80% in Argentina. In Brazil, the curve is slowing down. Currently, the IPCA, the official index in the country, is 6.4% for the 12 months up to October, way below April’s peak of 12.13%. In October, specifically, there was an increase of 0.59%, putting an end to the 3-month cycle of deflation. Although nearly all the groups have registered a raise, pressures have been more punctual, and not so persistent in comparison to what was seen throughout the first semester. With inflation cooling down, the Brazilian Central Bank has stagnated the basic interest rate at 13.75% a year. Thus, this creates space to think about a reduction cycle of SELIC in 2023. The market forecasts this movement around the middle of the year. Global uncertainties, mainly regarding the Chinese economic activity and what threshold the American interests will reach, keep the exchange rate under pressure, which recently, has fluctuated between 5 and 5.40 BRL per dollar. Evidently, there is another event involved that causes noise and instability, the Brazilian presidential elections. Questions hover on the fiscal issues in the country, and how they will be handled by the economy staff of the new elected government. The scenario of a high-cost dollar hampers the reduction in inflation’s pace in a more intense way in the country. Another factor that has caused apprehension is the price of the oil in the international market, which continues to be above 90 dollars per barrel. Fuels like gas and diesel oil, which had strong reductions in a row since July, were back with prices’ increase in October, and the tendency is for small new readjustments over the following months. Regardless, with inflation’s average gradually giving in, what brings relief to the wallets of consumers, who can once again gently achieve a greater buying power. At the same time, the job market is still heated, with the country having created beyond 2 million formal job positions throughout this year. These two variables, income, and jobs are essential to stimulate commerce sales. Such that in September, for instance, there was a 1% rise in the comparison with the same period last year. In consumption’s basic sector, the supermarkets, sales have increased 3.8%. However, the sectors that are more susceptible to credit, like the furniture and household appliances, construction materials and vehicles, faced more difficulties moving forward with the high-interest scenario. Within the month, these were the negative highlights, with -5.9%, -7.9%, and -1.9%, respectively. In the service sector, the growth pace keeps going strong. In September, there was an increase in activities of 9.7%. The Highlights are those sectors that provide services for families, like hotels, restaurants, etc., which pointed out an annual increase of 17.8%. Information technology services also contributed to the general positive performance, with variation of 20%. Tourism, specifically, profited R$ 18 billion in September, an increase of 29.2% in the annual comparison, and it was the best result for the month since 2014, according to a survey by FecomercioSP. All the sectors have grown in relation to 2021. Nevertheless, the highlights were the groups of air transportation (63.1%), and accommodation and food (29.2%).
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The segment goes through a positive phase of heated demand. However, part of the companies’ profit is related to the inflation of tourism services. For example, flight tickets prices rose, on average, 40% in one year. It will be a massive challenge, managing to keep the attractiveness by the consumers for a longer period. In general, Brazilian economic indicators show that the worst phase regarding the pandemic’s consequences and the war in Ukraine has passed. Nevertheless, in order to have a significant improvement, consumers will need patience because it will be a long process ahead, full of internal and external challenges. In the national picture, challenges go through high interests and high exchange rate, as well as the lack of clarity about how the matter with public expenses and the expenditure ceiling will be solved. In the external scenario, the slow pace of China’s growth and the issue with the American interest level keep the governors under alert. Anyhow, Brazil is in a relatively more favorable global position regarding inflation. High prices generate the greatest social damages, a reduction in the consumption quality. Inasmuch as it’s possible to find food with gradually more modest prices, there is an encouragement, on which consumers can hope for better days for their family’s consumption. IMPORTANT DATA: Positive figures for the Brazilian agricultural harvest in 2023. According to a monthly survey by IBGE, the grain harvest is estimated at 288 million tons, a historical record, and driven by the soy upturn.
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Official data regarding formal jobs in the country show the creation of 278 thousand positions in September, with 2.15 million new formal job positions accumulating in a year.
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The average interest rate for consumers is currently 57.3% a year. A year ago, the percentage was 41.2% in a year, according to the Central Bank.
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Non-payment in the country has reached 30.3% of families, a historical record, according to the National Confederation of Commerce (CNC).
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For Black Friday, ecommerce awaits transactions slightly above R$ 6 billion, a 3.5% growth in relation to the same period in 2021, ABComm points out.
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Latin America Macro Data
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Unemployment rate
6,90%
8,70%
8,00%
10,70%
3,10%
7,70%
Basic interest rate
75,00%
13,75%
11,25%
11,00%
9,25%
7,00%
83,00%
6,47%
12,80%
12,22%
8,41%
8,64%
Inflation (LTM - Jun ) *
*
LTM - Last Twelve Months
Until June Legend: Green, Red and Black The data get better, worse and equal than the previous month.
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CONFIDENCE INDEXES: The Consumer Confidence Index (ICC) increased 2.4% in October and reached the highest threshold since January of last year, of 114.2 points. In the annual counterbalance, there was a 3.4% growth. Consumers are more confident due to inflation’s cooling down, above all in the food group, which weighs more in their budgets. At the same time, a more heated job market brings better opportunities to the families in the capital of São Paulo. The Trade Entrepreneur Confidence Index (ICEC) pointed out a monthly increase of 3.4% and reached 122.4 points in October, the highest level since the beginning of the pandemic, in March 2020. In the comparison with October 2020, there’s 7.5% increment. Better consumption conditions of families are allowing a better performance in the commerce sales, and consequently, increasing business owners’ optimism.
Consumer Confident Index (ICC) and Comerce Businessman (ICEC)
Consumer Confident Index (ICC) and Comerce Businessman (ICEC)
150 140 130 120 110 100 90
ICC
Aug-22
May-22
Feb-22
Nov-21
Aug-21
May-21
Feb-21
Nov-20
Aug-20
May-20
Feb-20
Nov-19
Aug-19
May-19
Feb-19
Nov-18
Aug-18
May-18
Feb-18
Nov-17
Aug-17
May-17
Feb-17
Nov-16
Aug-16
60
May-16
70
Feb-16
80
ICEC
Note: The ICC and ICEC vary from 0 to 200. From a 100 to 200 points, it is considered an optimistic threshold, and below 100 points, a pessimistic one. Although the indexes are from the city of São Paulo, they follow a tendency of what is happening in the rest of the country since the city, the largest in Brazil, represents 11% of the National GDP.
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X-RAY OF LUXURY TRAVEL IN BRAZIL This month, PANROTAS and ILTM launch the second edition of the ILTM & PANROTAS Annual Luxury Travel Report (Brazil-Latin America 2022/23), with an X-ray of the Brazilian luxury traveler, in addition to data on trends in the sector in our region, economic analysis and the vision of travel agencies and suppliers of this segment. Two exclusive surveys are part of the publication, conducted by TRVL LAB, which show the intentions and consumption habits of Brazilians with monthly income greater than 20 minimum wages. Luxury Brazilian travelers make 2 to 5 domestic trips per year, with 7.11% taking more than 20 domestic trips per year. These data are similar to those of the first survey, carried out in September 2021. As for international travel, even with the reopening of borders, the frequency remains below the pre-pandemic period, with only one trip in the last 12 months. About 50% of respondents said their travel budget has increased from pre-pandemic. REGIONS In the regional distribution of luxury travelers, 60% are in the Southeast region, where Rio de Janeiro and São Paulo are located. The second place comes with the Northeast (19%), followed by the South (12%). About the next international trips, Brazilians expect to make them in the first semester, and they will last between 5 and 15 days, with an average cost of R$ 10,000 to R$ 25,000 per person. 43.1% said they have national and international travel plans, 36.8% only travel in Brazil, and 20.1% travel abroad. OTHER RESEARCH HIGHLIGHTS Upcoming international destinations: United States, Portugal, Italy, Orlando, Europe, Paris, New York, Argentina, England and London. Main concern before traveling: Flight changes and cancellations Main purposes for the next leisure trip: Relax and rest, fun, discover new places and celebrate life. Characteristics for choosing a trip: ease and practicality and quality of services and attractions. Price is only the fourth item. Check out the complete survey at www.trvl.com.br and see the analyses, results and trends.
This report is produced by PANROTAS and FECOMERCIOSP to support your business decisions. The contents are valuable assets to Destinations and Travel Organizations, both domestic as well as international. For further information please contact ri@fecomercio.com.br redacao@panrotas.com.br.
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