LATIN AMERICAN MARKET REPORT


LatAm markets encouraged by early signs of recovery


New political administrations, fiscal policies, improved consumer confidence and a stabilisation of currencies has seen an eagerly awaited return to growth for many countries in Latin America says Charlotte Turner. However, many are still not banking on a boom year just yet.


A


ccording to the Consensus Forecasts – published by macroeconomic firm,


Consensus Economics – gross domestic product (GDP) in Latin America and the Caribbean is expected to grow by 1.5% this year and 2.5% in 2018, putting an end to ‘six years of an economic downturn’, including recession over the past two years. As green shoots of recovery


begin to sprout, in another positive development, the World Bank says that today more than ever before, Latin American and Caribbean countries are pursuing counter- cyclical fiscal policies – spending more in bad times and saving in good times. This is according to a new semi-annual report for the region from the World Bank. “If they materialise, recoveries


expected in Brazil and Argentina will largely fuel the return to growth in the region,” adds the World Bank. “Mexico’s growth is expected to hover at around 1.4%, while Central America and the Caribbean will maintain steady growth of around 3.8%.” In response to the global financial


crisis of 2008, the number of countries with a countercyclical fiscal policy increased from 10% to 45% of the region’s economies. Countries such as Chile, Colombia,


Costa Rica, El Salvador, Guatemala, Mexico, Paraguay and Peru began to increase public spending and/ or lower taxes in an attempt to stimulate the economy. While such measures produced fiscal deficits, they were the result of a concerted effort to minimise the downturn. The World Bank believes that these


countries can now capitalise on the fact that the engine of growth for the


JUNE 2017


In South America, Brazil saw an important acceleration in the second half of 2016 recording double-digit growth, says Dufry.


region, Brazil, is seeing a stabilisation of its economy following two years of extreme uncertainty. During an ‘Education Session’ at


the 49th IAADFS Duty Free Show of the Americas in Orlando in late March, retail operators from South and Central America agreed that trading conditions had improved in the first quarter of 2017, following a very challenging 2015 and a tough H12016.


Dufry’s double-digit growth In particular, panellist Gustavo Fagundes, ASUTIL President and COO of Dufry Brazil revealed that the company was ‘getting back to growth’; double-digits in some locations as currencies had stabilised. Further evidence of this was


provided in an annual results statement published by Dufry in the early part of this year. The world’s leading duty free and travel retail operator reported that in Latin America sales turnover grew to CHF1,531.1m ($1,404.8m) in 2016 – vs CHF1,409.6m in 2015 – with organic growth in the division reported at


-4.1% for the full year, to which the fourth quarter contributed +3.7%. Dufry said: “In Central America,


Mexico performed very well, as did most operations in the Caribbean – in particular the Dominican Republic and Jamaica as well as our cruise business, to name a few. “In South America, Brazil saw an


important acceleration in the second half, recording double-digit growth. Other operations in South America also did well, such as Ecuador, Peru and Chile, while Argentina remained negative throughout the year, but showing improvements so far in 2017.” During the IAADFS Education Session, Erasmo Orillac, IAADFS


“If they materialise, recoveries expected in Brazil and Argentina will largely fuel the return to growth in the region. Mexico’s growth is expected to hover at around 1.4%, while Central America and the Caribbean will maintain steady growth of around 3.8%.”


The World Bank TRBUSINESS 33


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