Page 19 - ASUTIL 2024 Edition

INSIDER

Slower economic growth for Latin America

An economic overview by John Gallagher in Buenos Aires

The world’s attention has been 1200 to 1300. Making exchange rate vibrant economic areas in Brazil.
focused on Argentina since the election predictions in Argentina is a fool’s game In macroeconomic terms, Brazil is
of Javier Milei as president in December. but the relative tranquility of the last six performing well. Inflation last month hit
But further north, economies are growing, months is a positive sign. 3.9%, down from 4.5% at the end of 2023
although a little slower than last year. The GDP is predicted to fall between 3-4% - the end of year target is 3.0%. President
post-pandemic recovery is coming to a halt this year, however many analysts expect Lula has not been able to kick-start the
and the leading economies in the region some turnaround in the second half of economy, which is only growing at around
are looking at ways to increase growth and the year although when is still a question. 2.2%, due to a robust performance from
lower inflation. Early in June the government was able the agriculture sector. Government will
Agricultural and mineral commodity to announce an increase in tax revenues cut interest rates with the hope that strong
prices are stable at the moment and during the month of May and this could be consumer spending might fuel eventual
unlikely to give governments a welcome the first green shoot indicating recovery. growth. All economists agree that a healthy
push forward. Surprisingly, there has been little Brazilian economy is good for the whole of
Inflation will continue to fall in social unrest, with only two or three Latin America.
2024, and lower rates may support a more general strikes called by displaced Labor In Colombia GDP growth of around
flexible monetary stance, particularly in Unions. Meanwhile, Milei continues his 1.1% is expected in 2024, up from 0.6%
Brazil, Peru, Chile, and Uruguay. world tour to attract foreign investments last year. The government will be looking
With Guyana enjoying an oil- into Argentina with recent visits to the USA to boost this figure.
related boom, growth may be as high as and Europe. He has held several high-level Inflation in Colombia closed last
25%. However, the discovery of new oil meetings with leading entrepreneurs around year at 9.2%. The Bank of the Republic of
reserves has also attracted the attention the world, but still no news of major Colombia is forecasting 5.9% for the end
of neighboring Venezuela and an old investments. of 2024, while other analysts are saying
territorial dispute has resurfaced. the figure will be between 5.0% and 5.5%.
Brazil & Colombia Even with the lowest figure Colombia will
Argentina struggles The situation in Brazil is slightly more still be in a worse situation than Brazil,
Argentina is, of course, the major complicated, following the floods in the Chile, Peru, and Mexico, but in a much
exception to the news on growth and Rio Grande do Sul region, one of the most better situation than Argentina.
inflation. Argentina’s President Milei has
now been in power for six months. Without
a doubt the macroeconomic situation is
better than the one that Milei inherited from What does all this mean for the travel retail business?
the previous government. At one point in
mid-December and early January, there was
a significant danger of hyperinflation, with Argentina is the big worry for many duty free suppliers – the devaluation has taken
the administration talking about inflation money out of the consumers’ wallets, forcing them to be careful about planning trips at
of more than 1000%. That risk has now home or abroad. Argentina reported no growth in domestic passenger traffic for the first
disappeared. 4 months of 2024. Traffic reached 10.59 million passengers compared with 10.66 million
Inflation has fallen month by month, last year. Surprisingly however, international traffic grew by 16.7%, reaching 4.47 million
from over 30% in January to 8% in April. passengers, compared to 3.83 million the previous year.
Most analysts are expecting somewhere In Brazil, Sao Paulo Guarulhos saw an increase of 6.9% to 13.77 million passengers.
between 5% or 6% for the month of May. Domestic traffic grew from 8.54 million to 8.77 million, whereas international traffic grew
Note that these are monthly figures. Annual by 15% to reach 5.00 million passengers.
estimates in January exceeded 300% for The figures at Rio de Janeiro Galeão Airport were better but skewed by a government
the full year but the government seems to directive to divert some domestic traffic from Santos Dumont Airport to Galeão. Domestic
have controlled price increases with a mix traffic grew from 2.44 million to 4.59 million (+88%), whereas international passengers
of strict fiscal controls and squeezing the reached 1.59 million, an increase of 30.32% compared to the previous year’s figure of 1.22
supply of physical banknotes in circulation. million.
Analysts are now predicting a rate of Aerocivil, Colombia’s Civil Authority confirmed that 13.29 million passengers used
around 140-150% in December. Colombian airports in the first quarter of this year, an increase of 14.8% compared to the
Future inflation could depend on the same period of 2023. Passengers using international flights rose to 5.5 million, an increase
USD exchange rate - the official dollar is of 32.6% on last year’s figure of 4.15 million.
floating around 890 to 910 and the grey
market USD has been operating between

19 June 2024 ASUTIL Special Issue