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12 Jun 2014

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Thailand-Brazil: Trade/Tourism amid FIFA World Cup 2014 (Current Issue No. 2513 Full Ed.)

Brazil is now hosting one of the world's most popular sporting events, the FIFA World Cup 2014, June 12-July 13, amid an inflationary spiral that may undermine their economy this year. This, in turn could hurt Thai exports to Brazil after the value plunged 15.4 percent YoY to just USD630 million during 4M14. However, the FIFA World Cup, which will likely support its tourism and domestic consumption, should help boost demand for Thai products over the rest of 2014.
We at KResearch are of the view that Thai shipments to Brazil will reach perhaps USD2.1 billion in 2014. Although that figure would represent a decline from 2013 by about 6-7 percent, Brazil remains Thailand's largest export destination in Latin America and we may use Brazil as a distribution hub for that region, as well.
Brazilian tourists continue to be a lucrative source of revenues for Thailand since they are have high purchasing power, spending approximately THB57,355/person/trip, or 30 percent higher than the average foreign tourist spending in Thailand at approximately THB44,016, though the number of Brazilian tourist arrivals to Thailand is relatively small compared to other nationals. During 4M14, there were 18,241 Brazilians visiting Thailand, up 39.1 percent YoY. Greater convenience in travel between the two countries and cooperation between Thai public and private sector agencies toward promoting Thai tourism during our low travel season should help attract more Brazilian holidaymakers here.
KResearch expects that the number of Brazilian tourist arrivals to Thailand during 2014 will reach 46,500, up 24.8 percent YoY, thus generating some THB2.6 billion, up 30 percent YoY in cash flow within our related travel businesses.

As the current host to the FIFA World Cup that is attracting a substantial number of tourists and thus helping bolster domestic consumption and other economic activities there, Brazil's central bank forecasts that its economy will grow perhaps 1.5 percent in 2014. This would benefit many Thai product categories shipped to Brazil. The FIFA World Cup also allows many Thai businesses the opportunity to learn more about Brazil as one of the world's largest economies, as well as a manufacturing and consumption center for Latin America, being factors that should foster closer Thailand-Brazil trade and investment ties ahead. This could be achieved by using Thai exports as the most popular products there compared to other ASEAN goods and existing business networks to penetrate the Brazilian market. In addition, Thailand could conceivably become an ASEAN export center for Brazil. The cordial relationship between Thailand and Brazil should induce greater business travel between the two countries, thus benefiting our tourism, as well.

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