October/21
MAIN FACTS .........................................................................................2 IMPORTANT DATA ...................................................................................3 LATIN AMERICA MACRO DATA .................................................................3 CONFIDENCE INDEXES ............................................................................4 BRAZIL IS BACK......................................................................................5 NATIONAL DESTINATIONS .....................................................................5 INTERNATIONAL DESTINATIONS............................................................5
MAIN FACTS News around the world has brought turmoil to the economy. Last month the financial problem of the second largest Chinese real estate company, Evergrande, came to light and dropped the price of iron ore, in anticipation of a much lower demand in the civil construction market. There are risks of new defaults by other companies in this sector, but the Central Bank of that country has already said that the problem is “controllable”. Soon after, the problems of energy, coal in China and natural gas in Europe were accentuated, rising 300% in one year. It is known that there is a delay in Chinese exports of inputs, from fertilizers to semiconductor chips for the automobile industry. China has already ordered an increase in coal production for not having to limit Chinese production capacity, which could exacerbate problems in delivering products to the world. These risks that the world economy has been facing are not favorable for countries like Brazil, which is emerging, and suffers from the volatility of its currency, the real. Its exchange rate is around R$ 5.50 per dollar, not contributing to the reduction of inflation in the domestic market. Although the Central Bank of Brazil has raised the base interest rate by one percentage point, from 5.25% to 6.25% per year, and should increase to 7.25% at the meeting at the end of this month (October), the exchange rate has not appreciated in value. There is the external news, but also the uncertainties about the economy and politics in 2022 that put pressure on the Brazilian currency for it to devaluate. Other news from abroad that makes the work of the Central Bank of Brazil difficult is the trend of interest rate to be increased by the FED, in the United States, which coexists with inflation of 5.4%, a high percentage for the American standard. This movement influences the exit of capital from emerging countries in search of more security. Meanwhile, inflation in Brazil rose 10.25% in the last 12 months, which has not been seen since the end of 2015 and beginning of 2016, when the IPCA, official index, was 10.71%. There are three groups that increase prices in the country: food and beverage that rose 5.84% in the year, housing, with an increase of 9.93% and transport, rising 13.46%. These groups contribute to 2/3 of the overall index. Fuel prices are rising, and not only in Brazil, due to the rise in oil prices in the international market, which has been negotiated above US$ 80 (Brent barrel), and this also has a strong impact on its derivative, the bottled gas, which registers an increase of 28.6% in the year. The country could rely on ethanol as a substitute for gasoline in flex-fuel cars. However, considering the sugarcane harvest failure around 30%, in addition to the producers having taken the opportunity to allocate production to sugar due to the more attractive price in the international market, it caused the average price of this fuel to rise 46% this year, making it less attractive for consumers. The country’s most specific problem is that of energy, due to the drought that reduced the reservoirs of hydroelectric plants, which account for just over 60% of electricity generation in Brazil. For the final consumer, the average rise in prices reaches 18% in the year. The rainy season starts now and runs until March, but forecasts are far from optimistic. However, the expectation for the Brazilian economy in 2022 has been reduced to a level close to
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1%, which will require a lower demand for electricity. Anyway, the high costs of the chain (fuel and electricity) already impact the business, reducing the businessmen’ profit margins. Besides that, it generates higher financial costs, considering the rise in the interest rate, the SELIC. And the August data from the sectors of the economy indicate a cooling of the economy. Industry registered a slight drop of 0.7% in the annual comparison and retail sector had a retraction of 4.1%. The services sector registered an annual increase of 16.6% and surpassed by 4.9% the performance of August 2019, pre-pandemic. However, there are asymmetric results, with transport and technology sectors recovering faster, while services provided to families, such as accommodation, bars and restaurants, have activities lower than in 2019. So much so that in the monthly survey of national tourism revenues, prepared monthly by the FecomercioSP Tourism Board, in August, there was an increase of 33.3% in the annual comparison, but it is still 20.6% below the same period in 2019. Therefore, although there are divergent performances over the last few months, in general the economy enters the period of more attention due to inflation above 10%, and the costs of the production chain and lack of inputs that generate uncertainty for businessmen regarding the behavior of the economy for 2022. And the lack of predictability keeps businessmen cautious when making investment decisions, which would be crucial for a stronger recovery. And this challenge is not limited to Brazil, the world has faced certain dilemmas to find a way back to a “normal” life.
IMPORTANT DATA: Preview of August GDP, the IBC-Br, decreased 0.15% compared to July, accumulating increases of 6.4% and 3.99% in the year, when accumulated in the last 12 months.
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August, 372,000 formal vacancies were opened across the country, according to CAGED (General Register of Employed and Unemployed) of the Ministry of Economy. All major sectors had expansion, but the highlight is the services sector, presenting almost half of the creation of formal jobs in the month, 181,000.
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The unemployment rate in Brazil is gradually reducing. In the quarter ended in July, the unemployment rate was 13.7%, below the 14.7% of the immediately previous quarter and practically the same as in the same period of 2020, 13.8%.
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The country reaches a record number of indebted families (74%), according to the National Confederation of Commerce (CNC), with emphasis on the credit card debt, a modality that families find to defend themselves against inflation.
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Latin America Macro Data
Argentina
Brasil
Chile
Colômbia
México
Peru
Unemployment rate
9,60%
13,70%
8,50%
12,30%
4,10%
9,50%
Basic interest rate
38,00%
6,25%
1,50%
2,00%
4,75%
1,50%
Inflation (LTM - sept*)
51,40%
10,25%
5,30%
4,51%
6,00%
5,38%
*LTM - Últimos Doze Meses Até Fev Legenda: Verde, Vermelho e Preto Os dados ficam melhores, piores e iguais do que no mês anterior.
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CONFIDENCE INDEXES: The Consumer Confidence Index continues to expand with an increase of 2.4% in September compared to August and increased 5.8% when compared to the same period in 2020. The current level of 114.7 points is the highest since February, when the second wave of the pandemic hit the country and the city of São Paulo. The economic reopening and vaccination reaching high levels and reducing the danger of returning to old restrictions contribute to the consumer to become more confident. However, inflation knocking on the door limits the increase in confidence to pre-pandemic levels. The Retail Businessmen Confidence Index (ICEC) registered a monthly increase of 5.4% in September and reached 113.5 points, the highest level since April 2020. In the annual comparison, the increase was even more significant, 32,2%, but it is important to remember it is influenced by the weak basis of comparison. Even with sales below expectations, this is the moment when the retail sector manages to have predictability to make decisions, as there is no risk of new closures. It is already a relative relief and it is reflected on the ICEC result.
Consumer Confident Index (ICC) and Comerce Businessman (ICEC)
Note: The ICC and ICEC range from 0 to 200 points. The level from 100 to 200 points is considered optimistic and below 100 points, pessimistic. Although the indicators are from the city of São Paulo, they follow the trend of what is happening in the rest of the country since the largest city in Brazil represents 11% of the national GDP.
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TOUR & TRAVEL: BRAZIL IS BACK Considering that the main countries visited by Brazilians on their vacation trips reopened (the United States is scheduled to reopen on November 8), travelers from Brazil are already planning their international getaways for the coming months. But make no mistake: there is an immediate pent-up demand that will fill the available flights (and today there are far fewer flights compared to 2019), but these travelers are making plans for 2022, which will generate demand throughout the next year. Domestic travel will dominate summer 2021/22, with beaches, resorts and cruises crowded. A survey released in October by Portal PANROTAS on people searching for travel on the internet compared to the pre-pandemic period, a partnership between the Semrush platform and PANROTAS, shows the main destinations sought on the web by Brazilians.
NATIONAL DESTINATIONS (setembro 2021) 1 – Fortaleza 2 – Porto Seguro (Bahia) 3 – Maragogi (Alagoas) 4 – Rio de Janeiro 5 – Porto de Galinhas (Pernambuco) In other words, Brazilians want sun and beach. They want to relax and have fun in destinations with options near coastal areas, predominantly in the Northeastern Brazil. Arraial do Cabo (beach on the coast area of Rio de Janeiro), Gramado (Serra Gaúcha), Jericoacoara (beach in Ceará), Fernando de Noronha (paradisiacal archipelago in Pernambuco) and Ubatuba (coastal city in São Paulo) complete the “Top 10”. Compared to October 2019, only Fortaleza, Arraial do Cabo and Jericoacoara still have a little lower absolute numbers of searches (about 20%). The other places have significant growth, such as 82% for Maragogi.
INTERNATIONAL DESTINATIONS Among destinations abroad, the United States reign supreme in the searches by Brazilians. 1 – Disney, with an increase of more than 200% compared to October 2019. 2 – Portugal, with a 123% increase in internet searches by Brazilians. 3 – United States, with the same increase as Portugal. 4 – Germany 5 – Cancun 6 – Paris 7 – Rome 8 – Spain 9 – Mexico 10 – New York P. 5
All Top 10 international destinations showed growth in searches in September 2021 compared to October 2019, pre-pandemic. Another survey released by PANROTAS in partnership with ILTM, shows the strength of the United States for Brazilian tourists. Conducted by TRVL LAB, the survey heard 705 luxury travelers from Brazil, all of them having an income above R$ 20,000 ─ 36% above R$ 50,000 and 16% above R$ 100,000. The United States lead the ranking, with more than 15% of the responses by respondents. 1 – United States – 15.27% of intentions 2 – Portugal – 7.25% 3 – Paris – 6.49% 4 – France – 4.96% 5 – New York – 4.20% 6 – Orlando – 3.82% 7 – Canada – 3.44% 8 – Cancun – 3.06% 9 – Europe – 3.05% 10 – Dubai – 2.67% Fifty percent of the luxury travel survey respondents are searching national and international destinations, and 23% only international destinations, showing that luxury has a great strength when it comes to traveling abroad, despite the rediscovery of Brazil during the pandemic. International travel will continue to increase throughout 2022. Among the national destinations for luxury travelers, Fernando de Noronha ranked first. The paradisiacal archipelago in the coastal area of Pernambuco is the desired destination of most luxury travelers heard in the survey, 10.3%. Then, Rio de Janeiro, Bahia, Fortaleza, Gramado, Northeastern region, Natal, Maceió, Santa Catarina and Salvador. The homework for international representatives doing business in Latin America continues: 1 – Movement for countries to accept all vaccines approved by the World Health Organization (WHO) 2 – Standardization of protocols 3 – Task force for renewing and granting visas (when necessary) 4 – Forms in Portuguese and Spanish 5 – Products with added value that make travelers forget the unfavorable exchange rate 6 – Investments in niches, such as luxury, sports, LGBTQIA+, solo travel, social travel, sustainable travel, family travel, relaxation and fun 7 – Small cities, natural parks, contact with nature and well-being have been included in the wish list of Brazilians when it comes to travel 8 – Tourist information in Portuguese, representatives in Brazil, recovered airline network and promotion must be up to date and ready Learn more about the surveys at www.panrotas.com.br and www.trvl.com.br. P. 6
LUXURY TRAVEL WITH
ILTM and PANROTAS, partners for several years in promoting the luxury travel segment through publications and events, launched the first Luxury Travel Yearbook – Brazil and Latin America. Divided into six sections, the yearbook, which can be accessed here, starts with economic data on Brazilians who are at the top of the economic and social pyramid. The data is analyzed by FecomercioSP. After that, we present two exclusive surveys, carried out by TRVL LAB, a market intelligence laboratory created by PANROTAS and MAPIE. The first survey was conducted with luxury travelers. The second survey was conducted with travel industry suppliers and distributors. The fourth chapter brings the travel behavior trends searched by ILTM. In the fifth section of our yearbook, we analyze trends in host agencies, with the three main players in Brazil. Finally, our Ladevi partners in Argentina provide an overview of luxury travel in Latin America. Access the digital version of the yearbook and consult the full surveys.
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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