FIFA economics Brazil

Business in Brazil via FIFA World Cup 14

Anirudh DAshish BhagatAvit Viral Doshi

Ayushi TodiGaurav Dewan

Brazil was chosen as the host for WC 2014 on Oct

30, 2007

Opportunity Lost?

Bright Future!!

2013.5 2014 2014.5 2015 2015.5 2016 2016.50

0.5

1

1.5

2

2.5

3

3.5

GDP growth %

GDP growth %

*As forecasted by World Bank

Infrastructure

• Brazil spent $ 14 billion on infrastructure and organization.

• Major infrastructure spending on –– Stadiums– Airports– Port and urban mobility

• Harbinger of expected future growth.

Stadiums

$3.6 billion spent on 12 new and refurbished stadiums across 5 cities

Boosted core sectors like steel, cement and power

Plan to spend 25% on stadium and 75 % on other projects like transport, security and communication failed.

Cost overrun by 75 %

Transportation

Transportation development generated long term benefits

Introduction of monorail, metro and expansion in airport handling capacity

Many projects were scrapped due to delays and cost overrun

Only 36 of planned major 93 projects completed

Tourism and Hospitality

Brazil attracted 6,00,000 tourists during the world cup from more than 180 countries.

62 % visited country for the first time

 Generated more than 15 per cent of the 4.8m jobs created during the nearly four-year-long administration of president Dilma Rousseff

Opportunity for tourism sector to convert one time visitors to frequent visitors

Food and beverage

$1 billion boost to food and beverage industry

Industry set to explore “Fan Parks” concept of selling drinks and fast food

 Boost may be temporary in nature.

Food prices artificially jacked up

Domino effect

Domino effect• The domino effect of direct actions can be

clearly seen as a series of economic, social and cultural developments.

• Interconnected nature of economics leads to intermediate spending.

• Opportunities for other exporting nations.• HSBC business expectation index moved

to 73.3 in July, 2014 from 52.2 in 2013.• Brazil’s win in world cup would have

sustained the Domino effect

Risks• Intensified protests against huge spending

on infrastructure in a country which high poverty levels.

Risks• Stadiums and other infrastructure would

end up standing like white elephants

Risks• Fuelled inflation that may not end up with

World Cup

Challenges

• Corruption and mismanagement.• Accidents, delays and cost overruns.• Using new infrastructure to return to

growth trajectory.

Opportunities

• Improving standard of living• Using tourism industry for long term benefits.• High quality sports development program

The World Cup has put an end to Brazil’s five-year stagnant foreign tourist inflow, from current 5 million to 7.48 million until 2014 and 8.95 million in 2018…

Is it a success story?

Since 1974 winners outperformed markets for the month following the finals.

Even host nations outperformed even after losing the world cup

Businessmen and corporate flock to such events.

Sombre mood of fans can leads to reduced investor confidence.

Better luck next time …Brazil!!

Thank you