The 2012 Olympic Games are well underway in London, and we're anxious to see whether hosting the games has positive economic benefits for the UK. But while we await meaningful data, let's get way ahead of ourselves and look at Rio 2016. According to a Goldman Sachs report, The Olympics and Economics 2012 , Brazil has a need to make significant infrastructure improvements. So in that regard, hosting the Olympic Games, and the World Cup just two years from now, presents the perfect excuse to catch up to other key emerging economies. Here is a look at how Brazil measures up against other emerging economies in key infrastructure investment: From the report: In recent years, Brazil has embraced a set of conventional market-friendly macroeconomic policies that allowed the economy to overcome a number of structural imbalances and attract record high levels of foreign capital. This, in tandem with a favourable external backdrop on average, has led to important social and economic gains over the last 15 years. Happily, the benefits of growth and overall macro-financial stability have trickled down the income scale. For example, the middle class has grown significantly over the past decade—an estimated 31mn people were lifted out of poverty between 1999 and 2009, and more than 100mn people are now part of the middle class (i.e., more than half of the population). Furthermore, the middle class is expected to reach around 60% of the population by 2018. The opportunities presented by these transformations should not be underestimated, as there are now as many middle-class and high-income earners in Brazil as the combined population of France and Britain. In all, the days of large fiscal deficits, high inflation and debt levels, external imbalances, and economic booms and busts have given way to smoother business cycles. Despite these advances, potential growth (at slightly below 4% per year) is still low in absolute terms and in comparison with other more dynamic EM and fellowBRIC economies. This is a reflection of structural impediments to growth that have yet to be addressed: a large infrastructure deficit after years of low investment, low domestic savings, a high and distortionary tax burden, high levels of labour informality, still comparatively low levels of human capital, and a low degree of openness to trade. In this regard, hosting two very large global sporting events presents an opportunity to boost investment in infrastructure. Brazilian government estimates suggest that up to US$50bn (about 2% of GDP) will be spent over the next seven years in preparation for these two large events. Hopefully, this will generate large long-term multiplier effects in the economy and boost potential GDP growth in the years to come. Infrastructure gains should have a strong economic influence following the Games. The hope in Rio is to see overall economic benefits following the Games as Seoul and Barcelona did, and not feel the weight of debt that other cities have felt. Read the full report here .
Filed under: development, Brazil, emerging economies, infrastructure, Goldman Sachs, emerging markets, bric nations, olympic medals, Rio, economic impact of olympics, Rio 2016