Brazil's slow growth bad for sport events

Jan. 31, 2013 at 4:19 PM
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SAO PAULO, Jan. 31 (UPI) -- Brazil's economic downturn is worrying planners that it will impact on preparations for the 2014 FIFA World Cup and the Olympics in 2016.

Fewer jobs were created last year and higher fuel prices threaten to spike inflation, new data from corporate and government sources indicated.

The Latin American economic giant's growth prospects dimmed last year just as international investors were piling in with huge cash inflows that put unexpected pressures on national currency real. Analysts say the real's overvaluation because of the opportunistic investment inflows hurt Brazilian exports, but information on what really happened remains scarce.

Labor Ministry data showed that in contrast to an employment boom in previous years Brazil's economy created the fewest new jobs in a decade in 2012, mainly because manufacturers and mining companies cut back jobs.

About 1.3 million payroll jobs were created in 2012 in contrast to about 2 million jobs the previous year, indicating it was probably the worst performance since 2003.

Despite that gloomy outlook, however, Brazil compares favorably with most of the recession-stricken industrialized countries. Brazilian unemployment is still less than 5 percent in contrast to the two-digit figures in the European Union and higher than 5 percent figures in North America.

Analysts say the Brazilian slowdown is temporary and the economy is bound to pick up as the country gears up for the World Cup next year alongside preparations for the 2016 Olympics.

Labor Ministry forecasts say more than 2 million jobs will be created this year but independent analysts remain skeptical about that figure.

The doubters also cite rising energy prices as a potential constraint on growth and job creation.

State-run Petrobras Thursday announced price increases for both gasoline and diesel, fuel surprising both ordinary consumers and industries. Gasoline prices rose 6.6 percent and diesel fuel prices were up 5.4 percent.

Brazilian private and public sector are on global shopping missions with proposals for public private partnerships running into tens of billions of dollars.

A Sao Paulo delegation in Britain is in discussions for at least eight public private partnerships worth $20 billion in infrastructural development.

British officials say they their experience with the 2012 Olympics will strengthen chances of Britain securing major deals in Brazil.

The PPP projects for Sao Paulo include the construction and maintenance of three subway lines, a monorail, an intercity train network, three prison complexes, four new hospitals and implementation of digital interactive equipment in schools throughout the Sao Paulo state.

British Trade Minister Stephen Green said "the European crisis opens a window of opportunity to awaken the healthy appetite of foreign investors in search of good business options in emerging markets."

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