World Cup Could Quintuple Investment in Brazil

Now the 2010 World Cup has wound down and the world's eyes have left South Africa, Brazil starts its countdown to hosting the world's next big football tournament in 2014. The sporting event is expected to be hugely beneficial to Brazil: a recent report puts some figures on the benefits for the Brazil economy from investment in the World Cup.

Ernst & Young in collaboration with the Fundacao Getulio Vargas, have just released the latest report in their Sustainable Brazil series - 'The Socio-economic Effects of the 2014 World Cup'. The report finds that Brazil can expect massive gains from the initial investment and should be capable of reaping rewards up to five times higher.

According to Ernst & Young, outlay for the World Cup will run to R$29.6 billion with the bulk of this amount allocated to investment in stadiums, media centres, new access roads and hotels. Brazil’s public sector will provide 42% of the initial investment and the rest will be financed by the private sector.

Although R$29.6 billion is a large sum, Brazil's investment into the World Cup will easily be worth it. The Ernst & Young calculations show that the production of goods and services for the football tournament will run to R$112.79 billion - a sum almost four times larger than the initial investment. Benefits in terms of income generated from investment are expected to total R$63.48 billion. And in addition, the World Cup is forecast to create 3.63 million jobs.

The implications for the Brazilian economy of more jobs and more income are huge and the report refers to World Cup as having a "snowball effect on the economy". The domestic consumer market in Brazil, which is already one of the world's most buoyant, will receive a massive boost from Brazilians benefitting - directly and indirectly - from investment in Brazil's showcase championship.

The report finds that the sectors in Brazil likely to gain most from the World Cup are civil construction - the biggest beneficiary generating R$8.14 billion between now and 2014, the food and beverages sector, utilities and the hotel and tourism industries. Civil construction is also receiving a massive boost from the rapid expansion of property investment in Brazil, particularly from social housing projects within the Minha Casa Minha Vida programme.

And not only is the World Cup a win-win situation for Brazil as a whole - individual cities hosting matches are also set to reap huge benefits. The Ernst & Young report examines each of the 12 host cities and predicts the total impact of tournament. In percentage terms of city GDP, Natal in north east Brazil will set the greatest benefit in 2010 when investment in the World Cup will generate 7.1% of municipal GDP.

But probably the most obvious benefits will come from tourism. Like South Africa now, Brazil will be catapulted into the world limelight during June and July 2014 and the number of international visitors to Brazil is expected to increase by 79%.

The graphics in the report comparing visitor figures with and without the World Cup leave no doubt as to the huge advantages behind hosting a world-class sporting event. Without the World Cup, Brazil would receive just over 6 million visitors in 2014 and around 7 million in 2018. With the World Cup, Brazil can expect to welcome 7.5 million tourists in 2014 and almost 9 million in 2018.

For Obelisk International, the 2014 World Cup represents a unique event for Brazil and the championship will give the country the chance to step firmly into the international spotlight. Not only are the economic benefits huge - as this Ernst & Young study more than emphasises - but there will also be plenty of social and cultural advantages. Brazil 2014 will undoubtedly be a great investment all round.

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