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% GDP
growth. 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.
Excellent post Christopher Alanson. I remember last summer when Brazil hosted the Confederations Cup there were a bunch of protests by people who were angry at all the money being spent on new stadiums when basic needs weren't being met by the people. I wouldn't be surprised if there a lot of protests this summer, and if Brazil is knocked out early, then it's really gonna be bad.
ReplyDeleteI find this interesting because it focuses on some of the negative aspects to hosting the World Cup. Because the entire world seems to be interested and involved in soccer, it seems reasonable that many fans would invest in tickets and travel to the country or even tune in and purchase some brazilian products. However, I like how you mentioned that while they are focusing all the government's money on organizing the World Cup, they are neglecting the country's education and healthcare. These crucial systems could easily be forgotten in an event as large as the World Cup, but they are vital to a country's stability.
ReplyDeleteAlthough Brazil’s GDP is projected to rise .4% with the World Cup, do you think that the people’s unrest that it could actually hurt their GDP instead? A factor of a good economy is a stable government, and general happiness of the people with their government, with the unrest it might disrupt their already rising government and plunge them into a downward spiral. All in all, they should invest more into themselves before these events.
ReplyDeleteRegardless if you are a soccer fan or not, the World Cup is such an amazing time. The international love for the sport causes lots of fans to go crazy. People are willing to pay any amount to go to Brazil and cheer on their team. If Brazil brings in the 70 billion dollars it is expected to and 332,000 jobs, Brazil will be a completely different country when the tournament is over. Soccer fans love and devotion is like no other and if Brazil doesn't go far, there will be a lot of heartache and problems.
ReplyDeletemajor sporting events play a pivotal role in most economies they generate large amounts of jobs and revenue. not only that but they give countries publicity and tourism. overall major sporting events like the world cup in brazil affect the economy in a major way like the world cup improving brazils GDP by.4%. it shows that these events can change your country drastically.
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