Latin America is one of the world’s worst hit regions by novel coronavirus pandemic and its economy is facing a slow recovery with a growing risk that worsening poverty and inequality will result into political upheaval. The region’s economic output has fallen below the pre-pandemic level. As per IMF’s forecasts, the region’s economic output will still be 4.8 per cent below the pre-pandemic numbers. Carlos Felipe Jaramillo, the World Bank head for the Latin America region also states that region would not be able to recover to its pre-pandemic gross domestic product level until 2023. This also indicates that amidst such economic challenges in the region, the region’s toy market has a dicey future. Consumers will shift to purchasing necessity household items like food and medicines and will curb their expenditures on low utility products such as toys. With smaller pockets, the negative market sentiments are expected to prevail.
According to the report, "Latin America Toy Market Outlook, 2027" published by Bonafide Research, the market had a USD 5 Billion market size in 2021. Further, the market is anticipated to grow at a more than 6% CAGR for the 2022–2027 period. As the toy market of Latin America constitutes a significant share of small and medium size companies as well as, has a big share of unorganized market, the outbreak of Covid-19 pandemic is expected to have caused major disruptions in the supply chain of the market. With unemployment rates being high and investor sentiments low, it is expected that the toy market in the Latin America region is also expected to witness lack of sufficient capital to operate and propel its growth.
The major market sitting in the driving seat of the Latin America toy market is Brazil. Brazil contributes to roughly 60% of the total Latin American Market Share. But the Brazilian landscape further casts a shadow on already dim Latin America toy market outlook. One peculiar phenomenon that particularly poses challenges for the toy market is the overwhelmingly unusual high death rates among babies and children. The data on Covid-19 suggests that the novel corona virus rarely turns fatal for children, yet as per BBC report, 1300 babies have died from Coronavirus. The only explanation to this phenomenon is a newly identified and serious condition being called multisystem inflammatory syndrome. The sheer number of Covid-19 cases in the country has also spread to children says BBC experts. As per the Brazil’s official data, the novel coronavirus killed at least 852 children up to the age of 9 whereas Dr Fatima Marinho a leading epidemiologist from the University of Sao Paolo conducted researches that suggest that the virus has killed 2060 children under nine years old, including 1302 babies as stated by Hindustan Time citing BBC.
The Latin American toy market was always shaky due to the slow growth rate of the overall GDP of the economy and the market further inevitably is facing turbulence due to the economic crisis in the region. Economists further identify and predict three main challenges in the region for year-continuing spread of virus, constraint on the amount of fiscal stimulus the region can afford and a lack of political support for structural reforms that could help boost growth. Amidst these conditions, the outlook for Latin America toy market looks bleak and only time will tell how it emerges again.
However, awareness of the cognitive and intellectual benefits of outdoor and sports toys, the influence of technology in promoting video games, rising demand for scientific and educational toys, and continuously rising personal disposable income levels are expected to boost the market growth in the coming years. Despite logistical limitations in the region, internet retail is expected to grow over the forecast period. The channel has seen acceleration with the popularization of "Black Friday" sales within the region, the rise in popularity of digital marketing, and consumer migration online looking for better prices and year-round promotional offers.