An economic downturn and exchange rate volatility are making business conditions tough for vendors of video surveillance equipment in a number of Latin American countries. As a result, the Latin American market is forecast to decline by 7.7pc to $580 million in 2015, writes Jon Cropley, principal analyst for video surveillance equipment at the US-based market research analysts IHS Inc. He writes:
Brazil is the largest market in Latin America. Its economy has been suffering as lower demand from China has led to plunging commodity prices and a shrinking market for Brazilian commodity exports. At the same time, the average exchange rate of the Brazilian Real was almost 37pc lower versus the US Dollar in the first 10 months of 2015 than it was in 2014.
Brazil is not alone. The average exchange rate of most currencies in Latin America have also fallen sharply against the dollar. Even Mexico, which is enjoying comparatively good economic performance, has seen its currency slide.
Most video surveillance equipment sold in Latin America is imported by overseas vendors rather than manufactured in the region. Even if these vendors have managed to grow their revenues in Latin American currencies, their revenues have often declined once converted back into their home currencies. IHS estimates that just two of the top fifteen vendors of video surveillance equipment in Latin America in 2014 were headquartered in the region.
Prospects for the future of the Latin American market look brighter. IHS forecasts that the market will grow by over 10% in 2016. However, exchange rates could have a big effect again. Their role in the market should not be underestimated.
