Although some sectors in Brazil will gain a boost from the World Cup, the tournament will not have a major economic effect, Moody's rating agency forecast Monday.
Standard and Poor's last week cut Brazil's rating to one notch above junk status over sagging growth and inflationary pressures, although Brasilia insisted the South American giant's economy would repond "robustly."
Moody's forecast sectors such as retail, food and beverages, accommodation and advertising sectors stood to gain from the June 12-July 13 sporting extravaganza.
But overall its Investors Services report indicated the overall effect would be marginal.
"(There is) some hope hosting the World Cup will help lift Brazil out of economic slowdown, but the associated economic activity ultimately pales before the country's $2.2 trillion economy, the usual levels of investment spending and the annual revenues of most companies," said Vice President and Senior Analyst Barbara Mattos.
Mattos added: "The 32-day event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business."
Even so, exposure from a tournament set to attract around a billion television viewers will, the report said, be a boon for corporate sponsors.
Brazil is spending upwards of $11 billion on hosting the tournament for the first time since 1950 but there have been public protests at the costs in a country whose infrastructure and services such as health and education require major overhaul.
Various urban mobility schemes and improvements to a saturated airports system have been postponed until after an event which is set to see some 600,000 foreign tourists visit along with three million domestic visitors.
Moody's said the pre-World Cup upgrades account for just 0.7 percent of of overall planned investment in Brazil across 2010-14 with most of the impact already felt.
Noting that spending on World Cup projects remained "well within budgets" and would not affect the long-term credit quality of the hosts, Moody's said the event would put Brazil in the global spotlight -- not necessarily a positive.
"While the World Cup offers potential reputational benefit, Brazil's image would be marred by a reprise of the social unrest seen last June, during a run-up event, the Confederations Cup, as it would be if needed infrastructure were not ready in time, with negative implications across sectors," the agency warned.
Brazil's finance ministry insisted that S&P's rating cut to BBB-, the lowest level for investment grade debt, did not reflect solid fundamentals and the agency maintained overall outlook as stable.
Although some sectors in Brazil will gain a boost from the World Cup, the tournament will not have a major economic effect, Moody’s rating agency forecast Monday.
Standard and Poor’s last week cut Brazil’s rating to one notch above junk status over sagging growth and inflationary pressures, although Brasilia insisted the South American giant’s economy would repond “robustly.”
Moody’s forecast sectors such as retail, food and beverages, accommodation and advertising sectors stood to gain from the June 12-July 13 sporting extravaganza.
But overall its Investors Services report indicated the overall effect would be marginal.
“(There is) some hope hosting the World Cup will help lift Brazil out of economic slowdown, but the associated economic activity ultimately pales before the country’s $2.2 trillion economy, the usual levels of investment spending and the annual revenues of most companies,” said Vice President and Senior Analyst Barbara Mattos.
Mattos added: “The 32-day event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business.”
Even so, exposure from a tournament set to attract around a billion television viewers will, the report said, be a boon for corporate sponsors.
Brazil is spending upwards of $11 billion on hosting the tournament for the first time since 1950 but there have been public protests at the costs in a country whose infrastructure and services such as health and education require major overhaul.
Various urban mobility schemes and improvements to a saturated airports system have been postponed until after an event which is set to see some 600,000 foreign tourists visit along with three million domestic visitors.
Moody’s said the pre-World Cup upgrades account for just 0.7 percent of of overall planned investment in Brazil across 2010-14 with most of the impact already felt.
Noting that spending on World Cup projects remained “well within budgets” and would not affect the long-term credit quality of the hosts, Moody’s said the event would put Brazil in the global spotlight — not necessarily a positive.
“While the World Cup offers potential reputational benefit, Brazil’s image would be marred by a reprise of the social unrest seen last June, during a run-up event, the Confederations Cup, as it would be if needed infrastructure were not ready in time, with negative implications across sectors,” the agency warned.
Brazil’s finance ministry insisted that S&P’s rating cut to BBB-, the lowest level for investment grade debt, did not reflect solid fundamentals and the agency maintained overall outlook as stable.
