Brazil is spending freely as it prepares to host the 2014 World Cup. The event is also expected to attract investment from abroad, and possibly boost Brazil’s country brand. But will it singlehandedly boost GDP by 1.5% as one top economist claims?
From China's slowing economy to the crisis in Europe to the delays in its pre-salt oil drilling plans - Brazil has no shortage of economic uncertainties to contend with. At least the South American giant has one thing on the horizon that's about as close to a sure thing as there is: the World Cup.
Over the next three years, Brazil, the next World Cup host country, can expect a GDP bump of 1.5% thanks to the soccer tournament alone, according to Ilan Golfajn, the chief economist from Brazil's Itaú Bank. A bit far fetched? Golfajn stands by the prediction, which he first made publicly during a seminar last year in São Paulo. The 2014 event, he claims, will generate direct investments of some $20 billion and create 250,000 jobs. And that's not all. Besides the boost it will give Brazil's hotels, some of which already have reservations for the month-long tournament, there's also what Golfajn calls the "brand effect."
"The image being broadcast globally is that Brazil is a country open to trade. That positive image will help us raise exports," he said.
Golfajn expects the World Cup will benefit both large firms – specifically the ones overseeing the major pre-tournament infrastructure projects – and the smaller and medium-sized companies that supply them.
Not that the benefits will be automatic for everyone. During the same seminar, Carlos Eduardo Maccariello, the director of technological productions for the Itaú Empresas division, urged companies keen to cash in on the event to plan their strategies starting now. Otherwise they risk ending up missing both the kickoff...and the victory party.
Read the original article in Spanish
Photo - Peter Fuchs