Even though some businesses will benefit greatly from the event, Moody’s assures that the positive impacts on the nation’s economy will be limited.
Leading up to this year’s Olympics in Rio de Janeiro, experts in a number of fields have expressed their concerns resulting in lukewarm acceptance of Brazil’s hosting. Zika and corruption have been two of the main criticisms towards the planners, arguing conditions will be less than ideal.
Brazil has resisted this criticisms, perhaps believing that the event will leave the country with significant profits in a time of crisis. However, in a recent report by Moody’s, Brazil’s hopes of making the big money they might expect might have just been squandered.
Moody’s stated that big benefits will come to Rio’s metropolitan area, that did receive $7.1 billion in direct investment for infrastructure. Some key projects did move forward due to the Olympics, like a subway expansion and a tramway from the airport to the metro area, both of which, Moody’s added, will make Rio a more dynamic place to do business in.
"Rio de Janeiro's upcoming summer Olympic games will give the city some lasting infrastructure improvements, as well as a temporary boost in tax revenues, but once the events are over, the country will wake up once again to its deepening recession," Moody's Investors Service said in a report.
The other big winners that will come with the events will be the private companies with heavy involvement in logistics and organization. With 350,000 spectators expected to come from abroad, companies like Latam Airlines Group S.A. are expected to have a big business boost considering they are the official transporter for athletes and Olympic committee members. Latam Airlines Group is headquartered in Chile and operates throughout the region, so the effect of their earnings on Brazil will also be limited.
Cielo SA, Brazil’s credit payment processor will also win big, they expect big business in what concerns currency exchange, which will surely boom during the games. Rental car businesses will also experience a rise in demand which will take a toll in Localiza Rent a Car, the official service for the Olympics.
Still, the effects on the economy at large are limited, loans granted towards development of the games represent a minuscule fraction of other outstanding loans, so in this respect there is no major influx of capital.