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.
Brazil’s struggling domestic economy and the troubled regional economy led the GBTA Foundation to significantly downgrade business travel spend growth for the country. GBTA expects 3.6 percent growth in 2014 and 4.1 percent in 2015, down from our earlier projections of 12.5 percent and 5.9 percent. Total business travel spending in 2013 has also been revised to $30.8 billion from our estimate of $31.2 billion as business travel spending fell in the latter part of the year as the Brazilian economy weakened.
“Outside economic pressures and a domestic slowdown as the country’s primarily consumption-driven economy begins to run out of steam are forcing the slowdown in business travel growth,” said Wellington Costa, regional director for GBTA Brazil. “The uncertainty of the upcoming elections has also impacted the slowdown in the economy and reduced growth in business travel locally. The previously expected growth in 2014 will be pushed further into the future and we expect higher rates of growth to resume by the end of 2015.”
“Brazil is a well-structured country in terms of electronic payment acceptance, with more than 2 million points-of-sales,” said Ruben Osta, Visa Inc. country manager, Brazil. “We continue to partner with clients to keep increasing local acceptance, so business travelers can use their Visa cards everywhere in the country.”
Other key highlights from the report:
- Despite the slowing growth, Brazil’s business travel industry surpassed South Korea to become the 7th largest market in the world.
- The growth in domestic business travel spending has been trending downwards since peaking in 2011, growing 9 percent in 2012 and 5.1 percent last year. GBTA expects it will continue to lose steam growing 3.9 percent this year and the same rate next year. Major structural reforms are necessary to regain high rates of growth experienced earlier in the decade.
- International Outbound (IOB) business travel has been even more challenging than domestic activity as trade took a major hit in 2013. GBTA expects slight growth (2.1 percent) this year in IOB spending before it gains a little footing in 2015, growing a projected 5.1 percent.
- It is too soon to tell if the World Cup gave the economy a boost. While it brought more than a million visitors to Brazil boosting hotel, restaurant, retail, transportation and entertainment sectors; it also brought declared municipal holidays, worker absenteeism and a virtual standstill in many manufacturing and mining sectors.
Exports Key to Renewed Growth
Brazil desperately needs more help from exports if growth is to break out of the current doldrums. Stronger growth in China, Europe, Argentina and the United State – its key trading partners – is required with Argentina and Europe being the main sources of Brazil’s export struggles.
A Need for Infrastructure Improvements
Despite infrastructure improvements leading up to the World Cup, the World Economic Forum ranked Brazil 114 out of 148 countries for quality of infrastructure, falling seven spots from last year. Brazil’s ability to improve this infrastructure will have enormous implications on business travel over the next 10 years.
