LATAM e-News – February 2018
Arturo´s Letter

Arturo García Rosa
President & Founder, SAHIC


South America in a new era of opportunities.

A quick look at the performance of the tourism business in the last year in the region, which were described in last month’s article, plus some changes that have occurred and others that are expected to occur soon in some of the countries of the Southern Cone and predict that what happened in 2017 will be just the tip of the iceberg of what will come and looks like a new growth process that deserves to be taken into account.

I pointed out in the mentioned article the confirmation of a predicted surprise: Chile and Colombia moving up from the second segment to the first, in the ranking of the great players of the region.

That segment, historically dominated by the two largest economies of the region, Brazil and Argentina, will no longer be a two-player segment.

Colombia

Colombia is definitely moving forward on a decisive path of growth, confirming that the path of peace has given back the possibilities of development that have seemed numb for a long time.

This has been a long road that began in the era of President Uribe, continued with his successor Santos and promises to continue in the years to come. A society that has matured out of adversity and understood that long-term strategies, common objectives, no mater what party colors, almost always ensure achieving superior objectives.

This year presidential elections will take place in Colombia. On May 27th, the first round will be held where it will be necessary to obtain half plus one of the votes in order to be proclaimed winner, otherwise there will be a second round on June 17th.

Chile

Although the undisputed leader of 2017 has been Chile, I decided to mention the country in the second place based on the dependency that its growth has had on the Argentine market, which has contributed 52% of arrivals in the past year, something that, as many point out, can turn into a threat in the future.

Personally, I believe that Chile, perhaps the most stable economy in the region, has undoubtedly raised its floor and it will be difficult to move the country from that first segment of great South American players.

While comparisons do not always work well, the same has always been said about Mexico in relation to the United States of America. However, despite the political and economic ups and downs, it remains one of the world’s greatest players.

Next March 11th, Piñera will return to assume his second presidential term succeeding Ms. Bachelet. A notorious change of color that society surprisingly supported in the polls and that has caused optimism not only among Chileans but the world in general. Everything suggests that the economy will have a growth cycle ahead that will, in any case, have an impact on the hotel business and tourism.

Brazil

Brazil, the great engine of the region hit by a series of implosions that impacted on the political scene, breaking the path of economic growth that will dazzle the entire world, is preparing for the presidential elections that will take place on October 7th.

(Woop, it seems that that day is meant to be an important day for Brazil, for the region, for the world and particularly for me, and please excuse me for the reference. It seemed unthinkable that one day I could reach the age I would accumulate that day. Woop! Unbelievable!)

The uncertainty is great regarding who will finally be in charge of the destinies of the largest economy in the region, although with the recent confirmation of the increasingly certain possibility that former president Lula may not be part of the next election process, it is more likely that a change of course, the change in direction that the market expects, may be possible. However, even though timidly, the signs of recovery have begun to end a long and painful recessionary process that did so much damage to the country and the region in general.

Argentina

In relation to Argentina, apart from the local uncertainty, where the painful process of the Kirchnerist period has been devastating both for its economy and for the morale of a large part of its population, the confirmation that society has made of the new course through the results of last year’s mid-term elections, has encouraged the incipient arrival of foreign investment, which is undoubtedly, although still timid, the beginning of what will be a long growth process that will be clearly demonstrated in the next years. Argentina is beginning to unleash that swarm left by the long Kirchnerist night in order not only to reverse its economic disasters but, more importantly, to begin to walk the road of recovering the values that have made that country a model to follow, that had everything to be a world power and lost it seduced by the “Lady of Eternal Bonanza”.

Peru

Regarding the country whose economy has grown the most in the last years in South America, it is worth mentioning that the Odebrecht scandal has had a decisive impact on its economy and politics, perhaps like no other country in the region beyond Brazil.

The fall of one of the largest Peruvian economic conglomerates such as Graña y Montero has impacted not only on the group but also on part of the country’s economy, to the point that some economists claim that some point of the lower GDP growth is due to such fall.

On the political sphere, the recent scandal that involved President Kuczynski took place and that threatened his continuity as such, putting him in the position of having to lead important changes in his cabinet again.

In almost any country in the world, such combination could have been critical, if not lethal, as in some way happens in Brazil. However, Peru shows with these episodes that its growth in the last years has not only been in economic terms, but also in the maturity of a society that seeks a destiny of greatness as it may not have known since the times of its empires.

Venezuela

To conclude the news related to political issues in the region, a quick mention of the presidential elections that will take place in Venezuela on a date that will be announced in the next few days with the “strange formality” with which the current government is acting. Nothing that will change the existing reality, even impact the rest of the region, even though it would be celebrated with joy that the country which used to be one of the region’s great economies could regain the place it deserves.

Uruguay

Finally, Uruguay, the country I adopted by these times (nearly six years already),”the little country” as many Uruguayans charmingly call it, a society that has adapted to live between two giants (Brazil and Argentina) and that is sometimes considered as if it were an extension of those countries, especially Argentina.

Uruguay surpassed 4 million tourists in 2017, a record number that will definitely be surpassed by the values we will see in 2018.

The current summer season has marked the return of the Argentines to the country, those who never finished leaving, but today “invade” with passion a destination that they have made their own and dispute with a Brazilian market that, although important, is still far away in numbers from what “the neighbor on the other side of the river” provides.

Ecuador

To conclude, it is worth noting Ecuador’s return to the path of growth with a 9% increase in tourist arrivals in 2017, which seems to be the beginning of a new upward process after two years of decline.

On the political sphere, this past weekend society has strengthened the current government, supporting it with an affirmative vote in the call for popular consultation. It seems that this will open a new process in the country, already without the figure of former president Correa as a relevant actor. Markets have enthusiastically welcomed this result.

What to Expect in 2018 and beyond

In short, a clear growth of Chile, Colombia, Uruguay and Paraguay. A timid reaction from Argentina that “threatens” to return decisively to the path of growth. The long- awaited return of Brazil, who is beginning to prove that this will be the case. Peru, with a slower growth than usual but growing and predicting that the growth of 8.9% recorded in 2017 is only the beginning of a new cycle towards the double-digit rise in 2018. This will confirm the start of a new cycle that will extend into the years to come.