Brazilian businesses substitute hope for doubt over World Cup legacy
With the FIFA World Cup due to kick off in Sao Paulo on 12 June, new research from the Grant Thornton International Business Report (IBR) has found that Brazilian business enthusiasm for hosting the tournament has plummeted over the past two years. However, while few business leaders predict increased investment or increased profits as a result of Brazil hosting the competition, there is hope that infrastructure improvements and a greater influx of tourists will prove enduring legacies.
The IBR reveals that the proportion of Brazilian business leaders who believe hosting the World Cup would translate into faster economic growth has fallen from 80% in Q1-2012 to just 33% by Q1-2014. Similarly, just 11% of businesses currently plan to make extra investment for the tournament, compared to 23% in 2012. A further 19% of businesses expect their profits to rise, with 52% expecting the tourism sector to see the biggest pick-up in activity.
Madeleine Blankenstein, partner, Grant Thornton Brazil, commented:
“Business enthusiasm for the World Cup has certainly ebbed away as the economic situation in Brazil has worsened over the past 24 months. Initially there was much hope in the business community that the infrastructure investments required to get the country ready to receive 600,000 visitors this summer - not to mention those coming for the Olympic Games in 2016 - would boost the long-term growth prospects of the economy. This should have been an opportunity to place Brazil in the international ‘shop window’, but instead international media attention has been focused on delays in stadia construction and public protests against both the government and FIFA."
More than two in five business leaders expect infrastructure investments - particularly those in the transport sector - to be the most enduring legacy of the games (42%), with a further quarter expecting a greater influx of tourists (26%). However, almost a third believe construction in their city has disrupted daily life and just 40% believe their local stadium will be well used once the tournament is over.
Madeleine Blankenstein added:
“Like the Bird's Nest in Beijing and Cape Town's Green Park Stadium, it is hard to see the Amazonas Stadium in Manaus being well used after the tournament but there are good examples to follow to avoid the stadia falling into disuse, particularly that of east London following the 2012 Olympic Games. The event allowed this previously derelict part of the UK capital to be modernized and it has subsequently attracted significant commercial and residential investment.
"Unfortunately some of the improvements in and around the stadia will come too late for the World Cup in Brazil. However there is now an increased awareness in government and in the private sector of the infrastructure shortfall and what needs to be done firstly to get the county ready for the Olympic Games and secondly for sustainable growth to become a reality."
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