Brazil’s Economy and the World Cup
Chris Tredwell
Mrs. Straub
Economics
8 April 2014
Brazil’s Economy and the World Cup
Despite early reports, and the droves of people from all over the world heading to Brazil this summer, not too much economic impact is expected from the 2014 World Cup. Back in 2011, Forbes reported that an expected “$70 billion” would be added to Brazil ’s economy, including “332,000 permanent jobs”. Past World Cups have shown that the impact is powerful, with Germany ’s 2006 World Cup GDP raising 1.7% GDPgrowth. On average, other host countries have seen even bigger impacts, with the average GDP growth following the years of the World Cup up in the high 2’s. It’s proof that hosting a modern day event like this can have huge impacts on a country. In spite of the initial reports of the positives coming from the being the host country, newer reports have come out have just under 70 days until the first kick this summer downplaying the impact of hosting the World Cup.
On average GDP growth rate of World Cup countries
Although the reports favor a higher GDP growth, for Brazil , the reports have seem to become bleaker. Only a .4% GDP growth, according to a new Moody report, is expected from 2014 to 2024, even with the loads of tourists bombarding the country. That’s not exactly what the country would want to hear on their investment, as they’ve spent 10.9 billion dollars, according to Bloomberg, a number that has upset much of the country.
Much of the country has turned on the idea of the World Cup, even as the days inch closer and closer to the opening kick. At its peak, 79% of the people supported the World Cup, which has seen approval ratings sink faster than Obama’s, and now sits at just 52% (Bloomberg). This isn’t because Brazilians have suddenly turned on The Beautiful Game, but they now realize what kind of money they’re spending on the infrastructure of the event itself, none of which is helping the infrastructure of the country, like schools and hospitals. Nothing good can come from a nation at unrest, especially with the whole world watching their every move.
The protests for this issue have remained peaceful, but could turn ugly, much like the protests of the Middle East . With the extreme dissatisfaction that the people of the country have, the only impact that could be made on the economy would be negative, as much dissatisfied people don’t spend as much money. Even when July passes, the focus won’t be gone for too long, as the world will be watching closely when the country hosts the 2016 Summer Olympics. What will be even more interesting is the reaction of the Brazilians when the fiscal budget will likely be cut in 2015, cutting down government spending, due in part to the spending on unnecessary events of the 2014 World Cup and 2016 Summer Olympics.
Even with all of the worry of how the government isn’t focusing on the people, all of the problems the people foresee now will go away with growth in the economy, and will be completely vanished if the soccer crazed country can take down other world powers and win it all this summer.
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