BRAZIL | While the Brazilian economy overall only grew a disappointing 0.5% last year, the country’s e-commerce market continued expanding at a remarkable rate of 24% to a total volume of R$ 35.8 bn (US$ 13.3 bn). In 2015, the biggest Latin American e-commerce market is expected to maintain a strong growth of at least 20%.
Brazilian economy in downward spiral
The Brazilian economy is far from the high growth rates of up to 7.5% it had seen until 2010. International economic deceleration, less demand for raw materials and agricultural products from countries like China and homemade problems such as inadequate infrastructure, high corporate taxation, excessive rise of governmental expenditure, increased inflation of 6.56% in 2014 and growing interest rates are limiting growth. While the government expected the economy to be fueled by the World Cup and the upcoming 2016 Olympic Games in Rio de Janeiro, the 2014 presidential elections and several large corruption scandals reduced both consumer and investor confidence.
E-commerce in Brazil still shows huge potential
On the other hand, the e-commerce market continues expanding independently from the overall economic situation. Ralf Germer, the CEO of PagBrasil, a leading online payment service provider for Brazil, explains: “Managers of international companies I speak to often think the e-commerce growth in Brazil is in line with the current poor GDP development. This is however not the case and one should treat them as two separate economies.
The middle class of about 40 million people is doing well. While increased interest rates and a slight devaluation of the Brazilian Real takes away some purchasing power, these people are still facing a strong employment market and increasing salaries.” Apart from that, e-commerce is gaining market share from stationary retail. According to IBGE, the Brazilian Institute of Geography and Statistics, stationary retail grew 8.9% during the first 10 months of 2014. That's a significant growth and underlines the huge potential of e-commerce in Brazil.
Foreign investments at same level
Direct foreign investments into Brazil were US$ 60 bn in 2014 and analysts expect this to remain stable at the same amount in 2015 as well. Ralf Germer adds: “The mega sports events focused a lot of attention on Brazil and clearly attracted many multinational companies. PagBrasil had a tremendous year and we expect to continue growing at an exceptional rate, together with our existing and new merchants, during 2015.”￼
PagBrasil is the premier online payment processing service in Brazil designed for Brazilian and international e-commerce platforms. Merchants gain access to the broadest set of local payment methods, which may immediately multiply your sales within Brazil. The company is an expert in the entire sales and buying process with more than 15 years of online payment processing experience in Brazil.
Sourced from Press Release by PagBrasil, January 15th, 2014