The Olympics aren't going to save Brazil
Business Insider
Published Aug 01, 2016 09:59AM ET
Updated Aug 01, 2016 10:38AM ET
Major sporting events are often presented as a way to help boost a country's economy.
However, theoretically, that effect is likely to be stronger for a smaller economy, where a huge influx of tourists and infrastructure investment could make a big difference.
And so, several economists and analysts have recently argued that the for major sporting events is often a money loser, as these massive stadiums are sometimes mothballed or just abandoned after the event ends.
Notably, Brazil wouldn't be the only big economy to not see a huge economic boost post-Olympics.
In his note, Glossop also shared a chart showing the average quarter-over-quarter GDP growth in the quarters during and after the Olympics compared to the two previous quarters for host countries of the summer games over the last 32 years.
As you can see below, for over half the countries, the average GDP growth in the quarter during and immediately after the games was actually weaker than before. (Note that the chart is not arranged in chronological order.)
Still, although Brazil might not get a huge boost from the games, some have noted that it looks like some of the worst for its economy might be over.
"...we are beginning to see other signs that the economy is bottoming out," argued a BMI Research team in a note to clients on Monday, citing the fact that manufacturing PMI data and industrial production data appear to have bottomed out. (Although, they don't think the country's going to see strong growth over the next few months.)
Goldman Sachs' Ramos also noted that there are some signs that major "recessionary forces that have gripped the economy are easing at the margin," specifically pointing to consumer and business confidence indicators.
"In all, as the country welcomes thousands of athletes and visitors and cheers the local favorites, it silently hopes that the soaring Olympic spirit will also help lift the animal spirits of the Brazilian economy and bring it back to the podium reserved for the top performers," he concluded.
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Written By: Business Insider
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