Investment in Brazil Warms Up For World Cup

The 2014 World Cup means big business for Brazilian investments, employment and the economy generally. Latest figures point to economic growth in excess of US$70 billion.

As well as one of the world’s most important sporting festivals, the World Cup is a huge money-making machine. 2014 Brazil will be no exception as can be seen from the expected earnings just announced by the Brazilian Ministry of Sport.

Big Numbers

Overall, the Brazilian economy is predicted to grow by US$70 billion. This growth will mostly come from public and private investment in Brazil in areas such as infrastructure and services. Consumption by visitors to the World Cup is also expected to bring a major boost to Brazil’s already buoyant economy.

Employment will see huge growth over the next three years as investment in Brazil builds infrastructure and stadiums for the matches. Some 330,000 permanent jobs are expected to be created throughout Brazil where unemployment is currently at a record low of 6.2%. This job creation will inevitably lead to more middle class wealth and in turn, generate further income for other sectors of the economy.

Tourism will be one of the sectors most benefitted by the football tournament. Over 600,000 foreigners will travel to Brazil to watch the games, bolstering the fast-growing Brazilian tourist industry. Foreign visitors will generate US$2.5 billion in extra income for Brazil.

Along with earnings from foreign visitors, the Brazilians themselves will be adding to the country’s coffers when they travel around Brazil to see the games. The Ministry of Sport estimates that the World Cup will generate US$3.5 billion in earnings from the 3 million Brazilians who go along to watch.

Adding up the Investment

Brazil, along with preparations for the World Cup and Olympics, is also making huge investment in real estate and hydropower. The 2 million homes being built in the Minha Casa Minha Vida programme represent the biggest Brazilian property investment ever. These plus two of the world’s largest hydropower plants do not leave a lot of leeway for more construction financed by public investment in Brazil.

Costs for materials and labour have risen sharply since Brazil was awarded the World Cup and the budgets for several stadiums are now considerably higher. The Sports Minister believes the construction of Brazil’s new stadiums will come out at around US$7,000 a seat, 17% higher than originally expected.

Despite the additional costs – common to preparations for all major sporting events – the overall figures look hugely positive to Brazil, set to reap huge benefits from the 2014 World Cup. Without a doubt, the next three years are full of opportunity for Brazil and Brazilian investment.

About Obelisk International: Obelisk International offers select investment opportunities in Brazil in a range of sectors such as residential real estate, construction and social housing. Obelisk gives investors security, profitability and diversity thanks to a combination of close attention to our clients’ investment requirements and high quality in-house research and analysis.

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