Brazil is on a hot streak. In early September Rio de Janeiro was named Forbes’ world’s happiest city. Shortly thereafter Brazil announced an early exit from the recession by posting a greater than expected 1.9% expansion in linked-quarter gross domestic product (GDP). Finally, as icing on the cake, Rio beat Chicago, Madrid, and Tokyo to become the first city in South America to host the 2016 Summer Olympic Games.
What does this mean for Brazil and the proud city of Rio de Janeiro?
According to studies by a Sao Paulo business school for the Ministry of Sports, the games will inject approximately $51 billion into Brazil’s economy through 2027 and add 120,000 jobs annually through 2016. In Rio alone the games are expected to generate 50,000 temporary jobs and 15,000 permanent ones. Brazil also plans to invest $11 billion as host. Nearly 70% of the planned investment is part of the government’s Accelerated Growth Program, which includes public-private partnerships and projects linked to the World Cup. Sales of tickets and sponsorships are expected to produce revenues of roughly $3 billion, said Marcia Penna Firme, spokeswoman for the Rio Olympics Committee.
Patrick Carvalho, an economist at the Rio de Janeiro association of industries, commented, “real estate is going to boom; they’re going to have to construct a huge amount of hotels and roads. The Olympics isn’t just 2016, there’s going to be marketing until 2016, so Brazil will have the flashlight. The purchasing power of the population will rise and tourism will get a huge boost.”
Rio will stage the games in four primary zones including: Barra, which will house the Olympic Village, media village and many of the sports venues; Maracana stadium will host the opening and closing ceremonies; Copacabana Beach will be used for outdoor competitions; and Deodoro. These four zones will be connected by a transportation ring comprised of subway, suburban rail, express buses, and Olympic driving lanes. The events will take place in 33 venues, over half of which already exist, leaving nine to be built permanently and six for temporary use.
After news of the win, Brazilian stocks (up 62% year-to-date) surged and the real rose against the dollar. The financial news, however, was overshadowed by the footage of over 50,000 Cariocas celebrating on Copacabana Beach, rejoicing in the win and the world’s recognition that this is indeed Brazil’s time.
