World Cup Boosts Brazil Economy, but What Comes Next?

Updated: 27 June 2014 15:21 IST

The 2014 FIFA World Cup is adding 30 billion reais ($13.4 billion) to the Brazilian economy, according to a government-commissioned study by FIPE, the University of Sao Paulo's economic research institute.

World Cup Boosts Brazil Economy, but What Comes Next?
Hosting the World Cup has reportedly created one million jobs in Brazil -- the world's seventh largest economy, with a GDP of $2.4 trillion in 2013. © AP

Rio de Janerio:

With a goofy sales pitch, piercing vuvuzela solos and giant green and yellow hat, Brazilian entrepreneur Josimar Barbosa was wooing customers and raking in a World Cup windfall.

"You too can be this sexy while you root for Brazil! Get your hats, vuvuzelas, flags!" he called to the crowd checking out the football merchandise displayed outside his store on a busy street in central Rio de Janeiro.

Wheeling and dealing, the charismatic 27-year-old closed one sale after another.

"It's like this all the time," he told AFP, estimating his sales are up 90 percent.

"Everything about this event is good for Brazil, including for us small businesses," he said, winking at a middle-aged woman buying 65 reais' worth of merchandise for 60 reais ($25).

The World Cup is adding 30 billion reais ($13.4 billion) to the Brazilian economy, according to a government-commissioned study by FIPE, the University of Sao Paulo's economic research institute.

The institute says hosting the tournament has created one million jobs in Brazil -- the world's seventh largest economy, with a GDP of $2.4 trillion in 2013.

But not all experts agree. Other estimates say the boost is far smaller -- less than the $11 billion the government spent on the event.

And many economists warn World Cup spending is fueling inflation that may not end with the tournament.

"The hosting of a major sporting event has not and will not have a major positive impact on Brazil's economy," said French insurer Euler Hermes, a subsidiary of Germany's Allianz, in a recent report.

The World Cup will bring "more inflation than growth for Brazil," predicted the firm's economic research arm.

Consumer prices rose 6.4 percent in the 12 months to mid-June, nearing the central bank's target limit of 6.5 percent.

Brazilians -- fearful of a return to the hyperinflation that gutted salaries in the 1980s and 90s -- often complain their money doesn't go as far as it did a few years ago.

That is a problem for leftist President Dilma Rousseff, who is up for re-election in October and has to persuade voters she can reboot the sluggish economy.

Topics : Brazil Football FIFA World Cup 2014
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