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Short-term bonus won't save Brazil's economy

Editor: Li Kun 丨CCTV.com

08-10-2016 14:22 BJT

By Hou Jun, Ph.D Candidate, majors in International Relations, China Foreign Affairs University

As the Rio Olympic Games have gone into full swing, the world is paying much attention to Rio. The "Olympic economy" is a hot topic on the internet. The international community is concerned the "Olympic economy" can't rescue Brazil's dire economic conditions.

Hosting the Olympic Games reflects a country's comprehensive strength and national image to boost its influence abroad. In contrast to Beijing's and London's huge investment in the Olympic Games, the Brazilian government had only spent 11.6 billion US dollars, which was considered, "using copper coins to host great event."

The "Olympic economy" has become a unique economic phenomenon over the past three decades, which has brought significant economic dividends for Beijing and London. According to the National Bureau of Statistics of China, the "Olympic economy" had raised China's GDP growth rates at 0.3 or 0.4 percent annually from 2001 to 2008.

The 2012 London Olympic Games had provided more than 30,000 jobs, along with an accumulated value of 28 to 41 billion pounds until 2020.  Brazil's "Olympic economy" is expected to promote social and economic development of Rio.

Global credit agency Moody's Investors Service says the Olympic Games would upgrade infrastructure construction in some cities of Brazil and generate higher tax receipts in the short term.

It is estimated that about 500,000 tourists would flock to Rio to support tourism, catering and hotel industries. It's estimated that the Rio Games would generate an infrastructure construction investment totaling 7.1 billion US dollars. Brazil's stock market has increased by 30 percent since the start of 2016. Although the "Olympic economy" has stimulated Brazil's economic growth in the short-term, Brazil may witness just a limited short-term economic impact. Over the past few years, Brazil's economic growth has been stuck in negative growth. Sluggish demand for bulk commodities, soaring inflation and capital flight had also worsened Brazil's economy.

In 2015, Brazil's GDP (gross domestic product) growth rate  had dropped by 3.8 percent, the worst record in 35 years.  Accordingly, the short-term bonus of the "Olympic economy" cannot resolve underlying problems of Brazil's economy, which has a long way to go to recover.

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

 

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