World Cup Generates Jobs and Boosts Economy in Brazil

By Lise Alves, Contributing Reporter

SÃO PAULO, BRAZIL – The 2014 World Cup in Brazil has generated nearly one million jobs in the country and will inject approximately R$30 billion in the economy, shows a recent survey conducted by FIPE (Economic Research Institute Foundation) for Brazil’s Ministry of Tourism.

For Vicente Neto, president of Embratur (Brazilian Tourism Institute) the survey’s results are very significant. “It is an extraordinary human legacy,” he said in a press conference last week in Rio de Janeiro. In the tourism sector alone, says the official, more than 50,000 jobs were generated due to the world sports competition.

Neto also noted that during the first week of the World Cup, hotel occupancy rates in the twelve cities hosting the games were 45 percent above that expected by analysts. Data shows that 340,000 rooms were occupied during that period, 100,000 more than estimated by FOHB (Hotel Operators Federation of Brazil). “The numbers are surpassing all expectations,” observed the official.

According to FOHB a survey conducted in late may showed that São Paulo, with close to 42,000 hotel rooms available, the highest in the country, had only a 31 percent occupancy rate for the World Cup period. Last minute visitors however seem to have increased hotel occupancy rates throughout the country.

The Ministry of Tourism estimates that 600,000 foreign tourists and 3.1 million Brazilians are participating in FIFA World Cup Events (games and Fan Fest), spending a total of R$4.05 billion in Brazil during the month-long event. With all the visitors, host cities are reporting filled restaurants and very happy retailers.

Carlos Caicedo, Senior Principal Analyst at IHS for Latin America, however, says that the economic gain is not as relevant as it seems. “We estimate that the World Cup will provide a boost for the economy of about 0.2 percent of the GDP, but this is rather small in the context of Brazil’s US$2.5 trillion total GDP.”

The Brazilian government reports that in all R$17.6 billion were spent in infrastructure for the World Cup, including R$8 billion in urban mobility, R$6.3 billion in airports, R$1.9 billion in security, R$600 million in ports and R$400 million in the telecommunication system.

Caicedo says that major sporting events are not likely to have immediate major impact on the economy, rather the benefits are more mid to long-term, particularly infrastructure “Both the World Cup and the Olympic games (in Rio de Janeiro in 2016) will have acted as major incentives to address the country’s infrastructure bottlenecks.”

“It is expected that within the next five years Brazil will have a larger and more efficient public infrastructure (airports, sea ports and highways), which will help to make the Brazilian economy more competitive by reducing transportation costs,” Caicedo adds.

Infrastructure, however, is not the only long-term benefit being sought by Brazilian officials. “I believe the great legacy of the World Cup for tourism will be the visibility it has given the country,” says Tourism Minister Vinicius Lages.

With the positive news about Brazilian hospitality in media outlets around the world, officials are confident the country will seem as a worthy vacation destination. “After the Cup we hope to expand by ten percent the number of foreign visitors to the country,” concluded Lages.