How Did the Brazil World Cup Affect the Brazilian Economy?

When notable sporting events such as the World Cup come to town, the government expects a windfall of cash to rain down on the area, but that isn't always the case.

When Brazil was chosen to be the host of the 2014 World Cup, the country was optimistic and excited about the economic benefits it would bring. When a major sporting event is held, it naturally attracts a lot of tourists and puts the host country into the spotlight.

However, three years on from the 2014 World Cup and the effect it’s had on the Brazilian economy has been surprisingly negative. While certain aspects of the economy have flourished, other parts have remained stagnant, or worse, declined. Here, we’ll look at exactly how the World Cup affected the Brazilian economy.

Did tourism help boost the economy?

The Brazilian economy was largely relying on the tourism industry to give it a boost. However, while the World Cup did attract one million tourists who traveled specifically for the event, overall tourism declined. According to the Brazilian Airline Association, air traffic decreased by 11-15%. This is thought to be down to standard tourists wanting to avoid the influx of football fans in the country.

The tourists it did manage to attract, helped to provide $13.2 billion to the economy. However, the country had spent approximately the same amount in preparations for the event. So, it didn’t quite match the boom the country’s officials were expecting.

Its impact on employment and business

Another sector which was hoping to capitalize on the 2014 World Cup, was the employment industry. One million additional jobs were created, but in the long-term, the employment sector actually suffered because of the event.

During the World Cup, a high percentage of Brazilians didn’t work. They were treated to time off in order to celebrate the huge sporting event. This meant businesses didn’t earn as much profits as usual and in turn, it’s led to less hiring and initially, fewer working days.

One sector which did do well, however, was the courier industry. While there wasn’t as big of an increase in tourism as first expected, businesses still needed to prepare for the influx of visitors. This meant couriers were kept busy, moving things around the country and preparing for the additional business.

What can be learned from the event

This isn’t the first time the World Cup has had a less than favorable effect on a country’s economy. In 2010, South Africa also experienced a similar issue. It made significant public investments, yet failed to drive in as many tourists as expected.

However, if you look at other sporting events such as the Olympic Games held in London in 2012, you’ll see the economy flourished. Though the Olympics were well-celebrated by Brits, they didn’t take the same level of time off as Brazilians, so the economy didn’t halt because of the event.

Overall, sporting events such as the World Cup do have the potential to significantly boost a country’s economy. However, host countries need to be aware of the opportunities and capitalize on them, rather than get too carried away by the event itself.

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