For the second time in a row, the GBTA Foundation significantly downgraded its business travel spending forecast for Brazil. After reaching $32 billion USD in 2014, business travel spending will grow only 1.8 percent this year, down from the 2014H2 projection of 4.1 percent.
SAO PAULO, BRAZIL – The GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA) – announced the results of its latest GBTA BTI Outlook – Brazil report, a semi-annual business travel outlook and overall economic analysis of Brazil. The report, sponsored by Visa Inc., includes the GBTA BTI, an index of business travel spending that distills market performance over a period of time.
For the second time in a row, the GBTA Foundation significantly downgraded its business travel spending forecast for Brazil. After reaching $32 billion USD in 2014, business travel spending will grow only 1.8 percent this year, down from the 2014H2 projection of 4.1 percent. Driving factors of this less-optimistic forecast include the struggling domestic economy, the lack of significant infrastructure improvements and the troubled regional economy.
“The Brazilian economy and business travel in the region face significant headwinds in 2015,” said Wellington Costa, regional director for GBTA Brazil. “The 2016 Olympics, however, should provide a confidence boost and a significant windfall to Brazil’s tourism sector. That combined with improved economic growth, lower inflation and a stronger global economy should lead to stronger business travel spending in 2016.”
Other key highlights from the report:
- Accelerating inflation during a period of slow economic growth is causing many growing pains for Brazil’s economy and natural causes are continuing to drive inflation – particularly the acute water shortage. Brazil’s reservoirs are at historically low levels and are on par with the worst month of 2001 when Brazil was forced to ration electricity. Electric rates are expected to rise as much as 30 percent this year further contributing to inflation.
- Falling oil prices in Europe and the United States have reduced inflation, but this is not the case in Brazil where energy prices are primarily controlled by the government. Due to fallout from the bribery scandal at Petrobras along with Brazil’s fiscal challenges, administered fuel prices have been allowed to continue to rise.
- Slowing growth has led Brazil’s business travel market to backslide to the eighth spot in the global spending rankings – falling from number seven.
- In 2016, improved economic growth particularly from exports and investment will support some improvement in business travel spending leading to 5 percent growth exceeding $34 billion USD.
- Domestic business travel in Brazil continues to weaken as both business and consumer confidence fall. GBTA expects 2.1 percent spending growth this year before picking up the pace in 2016, rising 5.7 percent.
- International Outbound (IOB) business travel has been even more troubled than the domestic activity as Brazil continues to struggle with a lack of competitiveness that is undermining export growth in addition to continued global challenges and a regional economic weakening. IOB spending growth in 2015 will be nearly flat before growing 1.7 percent in 2016.
“Brazil is the 8th largest business travel market in the world and one of the reasons is that the usage of electronic payments here is very broad,” said Percival Jatoba, head of Products, Visa do Brasil. “Brazilians are used to paying for everything with cards and Visa is committed to giving travelers the most convenient and secure consumer experience.”
Photo caption: Sao Paulo.
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