Brazil Business Travel Facing Significant Headwinds in 2015
Today and tomorrow, GBTA is hosting its 3rd annual GBTA Conference in Sao Paolo, Brazil bringing together travel buyers and suppliers in Latin America. Attendees will be able to network, build relationships, discover new opportunities and trends in the corporate travel market and learn best practices for travel management.
Conference attendees will also hear industry insights from various industry leaders including a presentation from GBTA’s VP of Research Joe Bates on the latest GBTA Foundation business travel forecast for Brazil.
Released today, the report shows Brazil’s economy will face significant headwinds in 2015 before rebounding in 2016. The struggling domestic economy in Brazil coupled with the lack of significant infrastructure improvements and the troubled regional economy have led GBTA to downgrade its business travel spending forecast for Brazil for the second straight time. After reaching $32 billion USD in 2014, business travel spending will grow only 1.8 percent this year, down from the 2014 projection of 4.1 percent.
The Brazilian economy and business travel in the region are certainly facing significant headwinds in 2015. For one, accelerating inflation during a period of slow economic growth is causing many growing pains for Brazil’s economy and natural causes are also 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.
While falling oil prices are good news in many parts of the world like the United States and Europe where they are driving down inflation, this is not the case in Brazil where energy prices are primarily controlled by the government. Thanks to fallout from the bribery scandal at Petrobras along with Brazil’s fiscal challenges, administered fuel prices have been allowed to continue to rise.
This slow-down in growth has led Brazil’s business travel market to backslide to the eighth spot in the global spending rankings – falling from number seven. It is not all bad news for Brazil though. 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. Also, the 2016 Olympics 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 a stronger business travel market in 2016.