October 2, 2009 / 5:22 PM / 8 years ago

2016 Olympics could help economy, ruling party

SAO PAULO, Oct 2 (Reuters) - Rio de Janeiro’s victorious bid to host the 2016 Olympics should give Brazil’s ruling party a boost and benefit the economy, although the size of the impact is hard to gauge.

* Rio’s victory is another feather in the cap of President Luiz Inacio Lula da Silva, who strongly backed the bid and is one of the world’s most popular leaders. It could add to his “Midas Touch” image and to a feel-good factor in Brazil ahead of presidential elections in October 2010. Lula, who cannot stand for a third straight term, is backing his chief of staff Dilma Rousseff in the race. But he has not ruled out a return to run again for president in 2014, two years before the Games. Brazil will also host the 2014 World Cup soccer tournament.

* A Rio-hosted Olympics will give Brazil’s economy a $24.5 billion boost between now and 2027, according to a government-commissioned study by nonprofit group Fundacao Instituto de Administracao. That would come from expanded production and increases in household income, tax revenues and employment, it said.

* The decision could help Brazilian financial markets’ sentiment in the short term as they continue their strong rebound this year from the global economic crisis. But a slew of research has shown how difficult it is to calculate the economic benefits of the Olympics.

* Any stock markets gains would likely be short-lived, said Jose Francisco de Lima Goncalves, Banco Fator’s chief economist. “I‘m not very optimistic,” he said. The Olympic investments will be important, he said, but “once real life returns, these changes get swallowed up.”

* A 2008 Congressional Research Service report prepared for members of the U.S. Congress found that many of the infrastructure investments made in past Olympic Games might have happened anyway, in other areas of the economy. “Assessments often do not consider the possibility that the money spent on the new Olympic stadium might have generated greater economic benefits if spent on hospitals or schools,” it said.

* Hosting the Olympics boosts a country’s international trade in subsequent years, the University of California, Berkeley and the Federal Reserve Bank of San Francisco found in a 2009 study. They said that, all things equal, countries that have hosted the Games appeared to have exports some 30 percent higher. They said an Olympics usually signals “trade liberalization and results in increased openness.”

* Ultimately, no definitive study about the economic advances from the Games exists, says Daniel Rascher, the president of U.S. consulting firm SportsEconomics. “I have not been to Brazil,” he said in an email, “but if Rio wins the 2016 bid, I’ll probably come and visit and spend a few thousand dollars. That’s economic impact.”

Editing by Stuart Grudgings, Kieran Murray and Will Dunham

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