OCTOBER/22
BRAZILIAN ECONOMY.........................................................................2 IMPORTANT DATA.................................................................................3 LATIN AMERICA MACRO DATA..............................................................3 CONFIDENCE INDEXES..........................................................................4
TRAVEL INDUSTRY ............................................................................5
MAIN FACTS While, currently, most countries still see the inflation peaking, in Brazil the scenario seems relatively more advanced, putting the country in the forefront in the battle against the rise in prices mainly caused by the pandemic and the war in Ukraine. Regarding internal prices, there was a deflation in the last three months. In the most recent result, in September, there was a downfall of 0.29% and the IPCA, by IBGE, accumulated an increase of 7.17% in 12 months, way below the 11.89% seen in June. At the beginning of the retractions, this was more concentrated on the drop in fuels’ prices. Now, the retraction has spread towards more groups within the indicator, which was the case for food and beverages, resulting in -0.51% in this last data collection. This group is the one that most weighs on the indicator, and on families’ budgets. In other parts of the world, for instance the American inflation, it reached 8.2% in 12 months up to September, and was kept above the market’s expectation. In South America, prices in Argentina rise on average 78.50%, and in Chile 13.70%. Levels still close to the highest ones recently seen. One of the main differentials of Brazil was the Central Bank’s posture in anticipating the cycle of monetary restriction that started in March of last year, and which according to indications in the minute of the Monetary Policy Committee’s meeting, from Central Bank, should be kept at the current threshold of 13.75% a year. Counterparts in the region started to move more solidly from last year’s last quarter on, which still follows an upward path. The delay also occurs in the United States, with interests that aren’t in the upward path yet, currently ranging from 3% to 3.25%, and with an estimated goal of a rate between 4.5% and 5% a year, a difficult threshold to be imagined for an economy like the American’s. Despite Brazil’s more favorable inflation scenario, it’s important to add a new element to that that can impair the continuity of this cooling down process cycle: the oil’s price in the international market. The Organization of the Petroleum Exporting Countries, OPEP, decided at the beginning of October to cut production by 2 million barrels per day. The Brent barrel, a reference for the Brazilian gas, is once again exceeding 90 dollars, which will result in pressure on potential readjustments in fuels. Another point of attention, and that could disturb the Brazilian inflation issue, is the exchange instability, mainly due to uncertainties about the American economy’s direction. The inflation in the country exceeded the market’s expectation, a fact that generates apprehension about the Central Bank curbing the economy in a stronger way. In case there is clear evidence that the curve will advance upwards, there is a significant and natural search for the American currency, and consequently that pressures the currencies worldwide, as is the case of the Real, which sways around R$ 5.30 per dollar, closer to 5 reais before. Unfortunately, with the rise in Brazilian interests aiming to hold the inflation, there has been negative effects regarding trade sectors that are sensible to credit. According to data by IBGE, in August for instance, sales in retail fell 0.7%, with highlights to the groups of furniture and decoration (-8.5%), construction materials (-8.2%), and vehicles (-4.1%). It’s a fact, however, that there was a solid stimulus to consumption in 2021, with SELIC, the basic interest rate, equaling 2% a year, leading to a higher comparison base. Nevertheless, even when comparing with periods before the pandemic, most of these segments present a lower sale’s pace. On the other hand, basic consumption segments like supermarkets and drugstores indicate a growth of 1.4% and 6.6%, respectively. The sales’ pace has also been impaired by the record of families presenting overdue bills. According to the National Confederation of Commerce (CNC), the rate of families with default payments reached 30% in September, the highest level in the series initiated in 2010, limiting the consumption
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ability. Even with important money injections occurring at the end of the year, like the “Brazil Aid” and the 13 th -month salaries, most of this amount should be destined to paying delayed debts. Regarding the services, the picture is more favorable, with a growth of 8.4% in August, as IBGE points out. The highlight has been activities linked to tourism, like air transportation (40%), and accommodation and food services (33.6%). According to the survey carried out by FecomercioSP, the sector’s turnover this month was R$ 17.6 billion, exceeding the pre-pandemic one, and being the highest amount for the month since 2015. Evidently, part of this gain is in the sector’s inflation, on average 24%, however that doesn’t diminish, in any aspect, the booming demand from consumers and companies for trips across the country. There are still many uncertainties about the magnitude of the global recession next year and its impacts in the Brazilian economy. While that doesn’t happen effectively, Brazil has decreased the inflation, and at the same time, opened between 200 and 300 thousand formal job positions per month, which brings an important income restoration to increase the potential default payments, and consumption, in the upcoming months. Unfortunately, interests are high and should advance high throughout the first semester of 2023, being a critical restraining factor in the Brazilian economy’s recovery.
IMPORTANT DATA: Although the preliminary GDP data have registered a decrease of 1.13% in August, in accumulated terms for the year the Brazilian economy indicates an expansion of 2.76%, and of 2.08%, in 12 months.
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Still regarding the Gross Domestic Product, FMI has increased Brazil’s growing projection from 1.7% to 2.8%.
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In August, there was the creation of 279 thousand formal job positions in Brazil, with a highlight for positions in the service segment (141.1 thousand), and the industry (52.7 thousand). The data is by the General Register of Employment and Unemployment of the Ministry of Economy.
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The Industry grew 2.8% in August, according to data by IBGE. The great part of the manufacturing industry registered an annual increase, with highlights to the products derived from petroleum (+5%), and food products (+3.2%).
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Latin America Macro Data
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Unemployment rate
6,90%
8,90%
7,90%
10,60%
3,30%
7,30%
Basic interest rate
75,00%
13,75%
11,25%
10,00%
9,25%
7,00%
Inflation (LTM - Jun*)
78,50%
7,17%
13,70%
11,44%
8,70%
8,79%
*
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) rose 4.4% in September, exceeding the 106.8 points in August to the current 111.5 points. In the comparison to the same period in 2021, there was a decrease of 2.8%. Anyhow, the index is in the optimism zone, and the growth in the last months can be related to the deflation, especially in fuels, gradually relieving the families’ budgets. And, at the same time, there is a positive job generation, which reflects in higher consumers’ safety. The Trade Entrepreneur Confidence Index (ICEC) registered 118.3 points, very close to the one seen last month, of 118.7 points. In the annual counterbalance, there was a growth of 4.2%. The ICEC fluctuates since May, this year, in a range between 117 and 120 points, which demonstrates a cautious optimism from business owners that sales are still beyond the expected threshold for this time of the year, mainly due to the expressive raise in interests, directly impacting the credit. Consumer Confident Index (ICC) and Comerce Businessman (ICEC)
Consumer Confident Index (ICC) and Comerce Businessman (ICEC) 150 140 130 120 110 100 90 80
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
May-16
60
Feb-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.
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TOURISM INDUSTRY The busiest months for Brazilian Tourism are around the corner. Summer vacations’ high season is coming, and with it the domestic and international air network is enlarging. The present moment is of relief due to a quicker than expected upturn, and the future is for positive perspectives. In the international scope, one of the best news in October was the return of Latam’s flight between São Paulo and Johannesburg, in South Africa, yet it’s only set for July 2023. The same Latam nearly doubled the offer of operations between Brazilian and Chilean destinations. The operation will rise from 240 monthly flights in January 2022 to 504 flights in December 2022. Furthermore, in the last month of the year, another relaunch takes place in Brazil. In the period, Air Europe resumes the flight between Salvador and its hub in Madrid, with two weekly operations, which will become three in May 2023. The upturn is full. According to Brazil’s Tourism promotion organ abroad, Embratur, the international air network in the country reached 94.74% of its 2019’s capacity still in September 2022. Last month, the number of international landings in Brazil reached 4,247, which constitutes an increase of 6.09% in relation to August, the highest one registered so far (4,003). Compared to September 2021, there was an increase of 123.65% on international connectivity. According to the Tourism Market and Competitive Intelligence Management of Embratur, from January to September 2022, 84 new flights started operating, and another 107 frequencies were added to the list. And still according to data by Embratur, by June 2023, there are projections for 106 new flights to Brazil, besides 101 additional frequencies. . In the domestic scope, the expectations are for overcoming the pre-pandemic period. The restrained demand should loosen once and for all in the summer of 2022/23. Rio Grande do Norte will have 592 extra flights in relation to 2021. Rio de Janeiro will have 40% more flights by Gol alone, including international flights. . Even still before October had started, Brazota disclosed the numbers of Brazilian operators regarding the second quarter of 2022. The association’s indexes showed that 81.2% of operators surpassed the 100% mark of revenues in the same period of 2021 (an indication it rose 15% in relation to the first three months of the year), given that half of these companies already achieved a growth of 200%. Whereas 9.4% have reached the margin between 50% and 100% in 2022, and the other 9.4% are still working to achieve 50%. Great expectations also hover on the beginning of the regular cruise season. With 184 confirmed itineraries, and 780 thousand accommodation beds available in almost a semester of navigation, the sector expects the injection of R$ 1.4 billion for the country. 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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