The transformation of remittances and payments markets is constant and on an arithmetic scale. In recent years, the gradual shift of transactions from the physical environment to the digital environment was already a tendency.
With the Covid-19 pandemic, through which social distancing and stricter prevention protocols became part of new normality, the transition accelerated, even in an economic slowdown scenario.
It is estimated that there will be a 15% drop in the total number of transactions carried out during 2020, in Brazil. However, the Central Bank of Brazil published a growth rate of 14.7%, in remittances to Brazil, in the first four months of the year, the highest value since 2010.
Although the economy oscillates, the remittances market is very active.
The economic crisis and the market for remittances to Brazil.
Unfortunately, we are facing a scenario of closed businesses or limited services. Companies, especially small ones, are experiencing serious financial difficulties and, consequently, an increase in unemployment.
Globally, Brazil has already witnessed a considerable devaluation of the Real.
With this prospect, combined with an overvaluation of foreign currency, it is easy to assume that there is an increase in dollar transfers to Brazil.
According to the Central Bank, these transfers of values between individuals grew 16.6% last year.
What are the changes seen in the remittances market?
With the facilities that new technologies provide, and with a globalized scenario in which more people are working and engaging in other countries, the remittances market alternates sending and receiving between countries, moving towards the most devalued currency.
Thus, even if there is a poor economic scenario in one of the countries involved in the transaction, the process is stimulated.
The service, however, does not depend on an economic crisis to show growth, since the provision of services across borders grows. A great example is YouTube, whose form of monetization does not depend on the currency or country where the professional resides.
Looking at Brazil, market conditions favor the entry of values as opposed to the exit. Making it clear that remittances is not the entry of currency in the country, but the payment in foreign currency that is converted and later transferred to the recipient in local currency.
How is it possible to see opportunities amidst the crisis?
The crisis has created alternatives for those who intend to invest in Brazil. With a rate of over R$5.00, it is to transform foreign currency into an investment option.
Dollar on the rise increases the economic power of those with foreign currency values.
The remittances market was already beckoning for growth, due to remote work and offered across borders. It is evident that the pandemic (and the economic crisis it generated), combined with the devaluation of our currency, encouraged the use of the means of transfer.
It is then expected, in a post-pandemic moment, with the consequent financial recovery, a return to normalcy of remittances abroad, but continued growth in transactions linked to the provision of services.
And since we are talking about the market and the financial crisis, why not take advantage and read more about how these crises turn out to be a time for reflection.
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