Number 41 - november/december - 2023
INDEX
03
Main Facts
05
Confidence Indexes
06
Travel and Tourism
MAIN FACTS In the international scenario, a few new facts in relation to the last bulletin. In the United States, the economic activity continues strong and the inflation, resistant. Although new raises by the Federal Reserve (FED), the American Central Bank, in the interest rate (currently between 5.25% and 5.5% a year) are not predicted, the expectation is that the cycle of cutoffs in interest will start only in the second semester of 2024, creating a challenging scenario for Brazil, since the reduction in the difference between the American and the Brazilian interest rates can impact on the value of Real in relation to dollar. In Europe, the cycle of monetary constriction ended and with a weak activity, a disinflation process started. The expectation is that the European Central Bank will begin decreasing the interest at the end of the first semester in 2024. In China, there was a review upwards of the economic growth forecasts after the announcement of incentives from the government. In the domestic scenario, the Central Bank cut, for the third consecutive time, the interest basic rate from 12.75% to 12.25% a year. The expectation is that the last meeting of the year will also result in a 0.5 percentage point downfall, and with that, Selic should end 2023 at 11.75%. The uncertainties around the fiscal politics can compromise the continuity of the reduction in interest next year or make the cycle end earlier. Even with the high interest in Brazil, the credit continues quite plentiful via financial institutions, for consumers and companies. Nevertheless, what is worth highlighting regarding the challenges ahead is the consecutive increase
in companies’ default rate. In a year, beyond 8 billion reais were left unpaid by the companies within the most diverse credit modalities. This is an alert call that several businesses have the potential to close operations or will need more time to be up to date with the bills and then think about investments, delaying a stronger pace in the economy expansion. Among economic activities, the trade and the industry have come “side by side” for some months, and the services and the agribusiness, which leveraged the GDP in the first semester, are slowing down, in which it has to be taken into consideration the significant comparison base. The industry registered a slight increase of 0.6% in September in the yearly comparison, driven by the segments: goods derived from petroleum (11.3%), extractive industry (9.1%) and food (6.7%). An information that concerns and indicates the investments are at a slow pace is the 12.9% downturn in the production of capital goods in relation to September 2023. In the Brazilian retail trade, sales increased 3.3% in September in relation to the same period last year, leveraged by activities that commercialize essential goods such as supermarkets (7.5%) and pharmaceutical and perfumery products (5.9%). Important activities such as clothing (-2.6%), fuels and lubricants (-8.7%) and construction materials (-5.6%) showed a negative variation. September’s data demonstrated the service sector’s slowdown. Sales dropped 1.2% in the yearly comparative, interrupting a series of 30 months with positive rates. Three out of five big, evaluated segments presented a negative variation with a highlight on transportation (-2.2%). IBGE Brazilian Overview Monthly Report - November/December 2023
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underlines that only 47.6% of the 166 studied service segments grew in relation to September of last year. According to FecomercioSP, the monthly survey of the national tourism revenue shows an increase of 1.7% in relation to September last year. After a strong expansion cycle with a resumption in presential activities, the national tourism continues to grow, yet with more modest variations – an expected result given the higher comparison base due to the sector’s recent positive performance. FecomercioSP’s expectation is an 11% growth in 2023.
In this final part of the year, consumption should be the highlight of the Brazilian economy. The ongoing disinflation process, mainly in the food and beverages group, opens up space in the household’s budget for purchasing other products and services, and the heated job market will ensure a higher injection of resources from the 13thmonth’s salary. The concern is the default level t of families that is persistent and can impact the consumption in the medium term. For 2024, the market expects a 1.5% growth in the GDP, and the attention is towards the government’s fiscal politic and its capability of increasing the revenue.
IMPORTANT FACTS:
1
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• The inflation, measured by IPCA, was 0.24% in October, accruing a 4.82% increase in the previous 12 months. The greatest impacts came from the transportation group (0.35%), affected by flight tickets’ prices that rose 23.70% in relation to September, and from the food and beverages group (0.27%), the one that most weighs in the index, interrupting a series of four consecutive negative variations.
• In September, 211,764 formal job positions were generated. In absolute terms, the service sector, the one that employs the most, was in the spotlight with the opening of 98.2 thousand positions, but in proportional terms, the construction sector was the one that most grew, with the creation of almost 21 thousand new formal job positions.
OCTOBER/2023 LATAM Macro Data Resume
Argentina
Brazil
Chile
Colombia
México
Peru
Unemployment rate
6,20%
7,70%
8,90%
9,30%
2,70%
6,70%
Basic interest rate
133,00%
12,25%
9,00%
13,25%
11,25%
7,00%
Inflation (LTM -Sep*)
142,70%
4,82%
5,00%
10,48%
4,26%
4,52%
*LTM - Last Twelve Months
Legend: Green, Red and Black The data get better, worse and equal than the previous month.
Brazilian Overview Monthly Report - November/December 2023
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CONFIDENCE INDEXES: The Consumer Confidence Index (ICC) was practically stable in October, registering 132.8 points, a 0.1% variation in the monthly comparison and a 16.2% growth in relation to October 2022. This is the highest level since February 2019. The improvement in the confidence of people in São Paulo is correlated to a lower inflation and a bigger job generation. In the last part of the year, the injection of resources from the 13th-month’s salary should have positive effects on the confidence. The Trade Entrepreneur Confidence Index (ICEC) grew for the fourth consecutive month, exceeding from 110.2 points in September to 111.7 points in October, a 1.4% increase. Although it is 8.8% below the level in October of last year, this slow but consistent recovery of the indicator, has been the consequence of families’ higher buying power, and at the same time, a lower pressure regarding companies’ costs, contributing with the increase in the prevailing margin.
Consumer Confident Index (ICC) and Comerce Businessman (ICEC) 150 140 130 120 110 100 90 80
ICC
out/23
jun/23
fev/23
out/22
jun/22
fev/22
out/21
jun/21
fev/21
out/20
jun/20
fev/20
out/19
jun/19
fev/19
out/18
jun/18
fev/18
out/17
jun/17
fev/17
out/16
jun/16
60
fev/16
70
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.
Brazilian Overview Monthly Report - November/December 2023
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TRAVEL AND TOURISM 10 FACTS OF 2023 THAT WILL BECOME A TREND IN 2024 1 The qualitative boom of presential events They are totally back. The main events of Tourism, such as Abav Expo, WTM Latin America, ILTM Latin America, PANROTAS Forum, and Festuris broke the records of public, and more than that, won in quality. The qualified and interested audience and the exhibitors full of new products and knowing how to engage the buyers made a historic match. For 2024, expect even more consistent events and the emergence of new formats, new encounters (many of them niched ones) and a lot of thirst for networking. 2 Eye to eye on a smaller scale as well Tourism is not only made of mega-events, we know that very well. And the companies and destinations have left the common place and carried out very creative events, which value the experience of those who are watching. If it is to watch a presentation of how your hotel has 150 rooms, a heated swimming pool and two suites with a jacuzzi, you’d better send the PowerPoint by email. The time we spend with people is very valuable, and the Tourism professional wants to go out and return prepared to offer and sell better products and experiences to their customers. 3 The international sector is back Before mentioning international trips, a very important addendum: what moves and sustains the Brazilian Tourism are the domestic trips. More than 90% of Brazil’s touristic GDP comes from in-country trips. And that’s not going to change, on the contrary, the national Tourism is increasingly developing and has a potential not yet explored (such as in national parks, ecotourism or in
the niches) that will blossom at any time. However...the glamour of international trips is back, and hard. There is a great demand, even with the dollar still being quite expensive, and this wealthy class of Brazilians want to explore the world. And they are already doing so. The bottlenecks are the usual ones: there are fewer international flights than before the pandemic; there is a lack of airplanes for Brazilian airlines; the barrier of the visa is an obstacle for visiting several countries (and yes, Brazilians will wait six months for an American visa, but they won’t wait a week for the Mexican one); and the mass that used to go to Florida, as they used to go to the Northeast haven’t returned traveling yet, due to economic matters. But expect a spectacular 2024 for international trips. Where to is possible, of course, as the wars in Ukraine and in Israel impede some plans (and even dreams) of visiting destinations like Russia (and region) and the Holy Land (and region). 4 In the United States, Florida reigns Visit Florida...You don’t even have to ask. Brazilians, in this travel upturn, are prioritizing their favorite state in the United States, with a highlight on Orlando and all the cities around, and the ones contemplated with a stopover by the Brightline train, that goes down to Miami. This is Brazilians’ favorite corridor, for those who love theme parks, shopping, beaches, and tourist attractions in Florida. But don’t lose heart with the other destinations. New York continues to be the second preferred one with great potential for more niches, and unique experiences are the key to attracting Brazilians to other destinations.
Brazilian Overview Monthly Report - November/December 2023
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5 Cruises and long trips Maritime and fluvial cruises, expeditions, and longer trips, to destinations across the world (hello, Japan) are also trends. But it is necessary to have a giant curatorship by Tourism professionals. For a public who is eager to explore destinations, but with everything prepared, with the smallest negative impact possible, with the highest contribution to locations and with the best experiences and unique moments. The Arab hubs (Doha and Dubai) are the favorite ones, but a layover in Europe or even on the American West Coast isn’t disregarded. 6 Trips of opportunities A Madonna’s concert, visiting the Sphere in Las Vegas (for an also memorable concert), the tennis’ Grands Slams, the bicentenary of a favorite author, the reopening of a big museum, the expansion of an attraction, a new area in a theme park, a new ship…There are people who are motivated by concrete reasons to travel, and just a special trigger is enough for that trip that can be short or one of those trips that demand a lot of work. 7 New channels, new technologies Be prepared for boldness and novelties brought by the generative artificial intelligence or by the creativity of entrepreneurs who are thinking about how to revolutionize the travel industry. More than that, the experience of purchasing trips and of traveling. It’s been a long time since there isn’t a concrete separation between offline and online anymore, and the first one is currently the physical figure of a mediator (consultant, agent, blogger…) who has available and needs to use all the possibilities and opportunities coming from new technologies. But don’t be deceived, beloved travel agents: direct sales will grow (or at least the investments from suppliers in this channel). However, this will not replace you because the travel content nowadays is too fragmented and spread across several channels and platforms. And nothing will replace your expertise. Since it’s well-used, of course. New ways of distributing trips are going to arise. In some of them, with mediators (new or old ones).
In others, with new models and/or directly with suppliers. The challenge is big for everyone. Or do travelers really want to buy their trips on 8 different websites? 8 Europe is booming Yes, we love the United States and Florida, but the number one international destination in 2023 was Europe. The great capitals, but also the itineraries across the countryside, the great hotels, but especially the boutique options and with a more tailored experience. Cruises. And even the famous circuits. Lisbon, Paris, Rome, Madrid, Barcelona, Amsterdam, London…Watch out, Florida. 9 Celebrations increasingly special in trade How to establish a long-lasting and reliable relationship with the Brazilian travel agents? This requires time and consistency. Being present in the events held in Brazil, promoting encounters for groups of agents or even one-o-one meetings in the companies…Showing flexibility, availability and knowing how to celebrate the achievements and to appreciate this partnership. Some companies have bet high in big celebrations and events, like the airlines and operators, also letting aside the obviousness of parties and workshops and organizing creative encounters, which will also stay in the memory of partner travel agents. 10 Educating, educating, educating Without being obvious, without being dull and redundant. Travel products are increasingly complex. The processes are even more complicated. The channels are more diverse, and the content is spread all over the place. Fragmented. So, it is necessary to always bet in the update of your distributors. Even being repetitive (without being dull, again, without the obvious PowerPoints). Because there’s a message that needs to be explained and said a few times. There are nuances that aren’t caught at first. There are so many changes in the products and in the processes that it is necessary to always alert your distributor. Invest in training and education. But for the love of God, be creative, objective, and friendly.
Brazilian Overview Monthly Report - November/December 2023
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LUXURY SURVEY Now in December, PANROTAS and ILTM are launching the third edition of the Annual Luxury Travel Report, which brings two extensive surveys (B2C and B2B) about luxury travel in Brazil. You will see that the luxury travelers’ budget has increased and will discover their favorite destinations and habits. And will be able to compare them with the previous surveys and with the B2B data, in which we heard travel agencies. The full survey is available on trvl.com.br. And the Luxury Annual Report can be accessed in
the DIGITAL EDITIONS section in PANROTAS’ Portal. The magazine brings, in English and Portuguese, three special articles about trends in luxury travel (Brazil, Latin America and Global), with a highlight on the preferences of the younger generations (Generation Z and Millennials), and also an economic analysis of the luxury market in Brazil. An excellent 2024 to all and we’ll meet at the big, small, and memorable Tourism events next year. Count on us to do more and better business with Tourism professionals in Brazil.
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.
Brazilian Overview Monthly Report - November/December 2023
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