Overall Latin American audio conferencing volume growth was 14% in 2016, the same as 2015. What’s going on? The local markets of Brazil, Mexico, Argentina, and Columbia have had significant economic challenges over the last few years; In 2016, however, each showed indications of economic improvement over 2015.
The largest market, Brazil, began to improve in June 2016 and continued to do so through the end of the year. For most indicators, this means economic activity declined at a slower rate, and Brazil was in recovery mode in the second half of 2016. Going into 2017, lower inflation, improved confidence, and a change in monetary policy continues to eliminate their backward slide. It is likely that 2017 will see Brazil’s GDP grow by between 0-to-1% and the economy will build some steam into 2018. The providers WR spoke to for our recent study consistently indicated confidence that the economy is improving (or at least not as bad as it has been). One of the largest impediments to audio conferencing growth is Brazil’s poor telecommunications infrastructure. Even after improvements made for the Olympics and the World Cup – mobile calls regularly drop and data lines typically provide an unreliable connection for real-time communications.
Mexico started the year off weak, then gained momentum, closing the year with an estimated 2.3% GDP growth (slightly slower growth than 2015, which was 2.6%). Uncertainty around Mexico’s trade agreement with the U.S. (NAFTA) has growth forecast to decline to 1.6% in 2017. Like Brazil, Mexico has an inflation problem that holds enterprises back from buying more, or encourages them to use existing solutions in-house (e.g., conferencing features of their PBXs). With a much more reliable infrastructure than Brazil and an increasing interest in conferencing, Mexico has a lot of room in which to grow. Will the Mexican economy, and subsequently the conferencing market, contract based on a re-negotiated trade agreement? Maybe, but for now there is clear evidence of improving market demand.
In Argentina, there are signs of improvement – December exports increased an amazing 34% YoY, after growing 20.8% in November. For 2017 and 2018, there is optimism for 3% GDP growth and slowing inflation. The largest impediment to conferencing use in Argentina is lack of interest. Clearly a limited number of multi-nationals use conferencing; however, interest from SMBs in-country is either low or non-existent.
Colombia’s inflation rate dropped for the sixth consecutive month in January and economic growth is forecast at 2.4% in 2017, growing to 3.1% in 2018. In late 2016, the government negotiated peace with FARC, the largest Columbian rebel group, and is in the process of doing so with the second largest, the National Liberation Army (February 2017). Peace could be good for the Colombian economy. The conferencing market is very small, and only grew by 3M minutes in 2016. A true economic revolution is required to get any meaningful number of minutes out of Colombia.
I remain hopeful, but not overly optimistic about the Latin American audio conferencing opportunity. It is not clear if UC and PWC (web conferencing) services will soon displace a significant volume of standalone audio conferencing. My rationale: Poor data networks and inconsistent mobile services in countries such as Brazil could hold back UC and PWC deployment and adoption – maintaining the standalone audio market.
Based on both the local economic and market challenges, we remain conservative in our 2017 forecast. While we believe the foundation for a large conferencing market exists in Latin America, the current economic and technology environment does not encourage it.
WR covers the local Latin America markets of Brazil, Mexico, Argentina, and Columbia. For country level detail and a deeper dive into the data see: Audio: 2016 Latin American Audio Conferencing study.