According to a report from Moody’s Investor Service, the Summer Olympics will yield some short-term economic benefits to Brazil, but little overall value in the long-term, as CNN Money reports.
The South American nation suffers through an ailing economy, while contending with a Zika threat that could spread as visitors from around the world congregate. Brazil spent over $7 billion in infrastructure projects in preparation of the Olympics.
Infrastructure projects related to the Olympics could provide speedy gains, but this is not guaranteed. Infrastructure is not enough to save an economy contending with rampant unemployment, high inflation, and lower revenue streams, among other factors.
Brazil was once a shining example among emerging markets, but lower commodity prices and the Chinese slowdown are primary issues that sent the economy into a tailspin, and no sign of relief appears on the horizon.
Moreover, the political situation has added more chaos to an already turbulent society, especially as the senate removed former President Dilma Rousseff from office and approved impeachment proceedings, with Vice President Michel Temer taking over as interim president.
The government stated that the political ousting would not affect the Olympics in any way. Many people around the world, however, are nervous about attending the sports gala due to a variety of factors, and this is reflected in waning ticket sales. Ticket purchases are down to the point where the government may buy additional tickets and pass them out to Brazilians.
Many potential visitors are concerned about Brazil’s high crime rate, and people are especially worried about Zika, a virus that can cause microcephaly in newborns and spreads through sexual contact and mosquito bites. Over 300,000 visitors from around the world will attend the games, increasing the risk of widespread contamination on an international level.
While authorities have assured the world community that Zika is under control, the government’s lack of resources raises further questions. Moreover, Brazil has failed to mitigate the transmission of bacterial infections that needlessly spread because of an underfunded sanitation system.
Health experts warn that travelers and athletes could fall prey to infection from untreated sewage left to fester in public, notes CNN. On the Zika front, authorities have launched fumigation campaigns to reduce the mosquito population, but some health professionals and athletes are calling for an outright postponement of the games as a precaution.
The positive news is that the games will take place during Brazil’s winter, but it will not be enough to halt the spread of the virus. Regardless of the dangers, Brazil has invested too much money into the Olympics to postpone or cancel. With that, Olympic investments were a waste of money when considering the minimal rate of return, and the energy and resources spent on the event could have been used for the greater good of the country as the economy nears collapse.