Here's how the World Cup will boost Brazil's economy

A man paints a 2014 World Cup design on a sand castle on Copacabana Beach in Rio de Janeiro, Brazil.
Mario Tama | Getty Images
A man paints a 2014 World Cup design on a sand castle on Copacabana Beach in Rio de Janeiro, Brazil.

Economists don't expect Brazil's economy to get an immediate boost from hosting the 2014 World Cup, but some say the long-term benefits will be 'priceless.'

"The net gains… will be substantial, but they are unlikely to be realized during the event; the gains will come in the years following the event and will be indirect," said Walter Boettcher, chief economist at Colliers International.

According to Colliers' report 'FIFA World Cup 2014: Brazilian Goals' published Wednesday, the benefits of hosting the World Cup are not purely financial, but rather linked to a nation's 'branding' in the international community.

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"Playing host will immediately raise the global profile of a country and might even change perceptions of the host nation, resulting in increased tourism and political benefits and alliances, but accrue over many years," said added Boettcher.

"The World Cup will act as a giant advertisement for Brazil and its host cities, showcasing them as places in which to invest, visit and live," he added.

The report highlighted how South Korea, China and South Africa's international profiles benefited from hosting the World Cup in 2002, 2008 and 2010.

Furthermore, it noted that Brazil's is set to host the 2016 Olympics in Rio de Janeiro which should provide a "double whammy" effect for the country's economy.

Has Brazil missed its World Cup free kick?
Has Brazil missed its World Cup free kick?   

Immeasurable benefits

The report noted Brazil will see other benefits including infrastructure improvements that might not have been realized otherwise. Newly-built stadiums could also catalyze urban economic and real estate development, it said, especially in Sao Paulo, Recife and Cuiaba.

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Another crucial but less measurable benefit will be the feel-good factor, as a World Cup event tends to boosts patriotism and national unity for the host country.

"In the history of the World Cup, it is hard to underestimate the 'feel good' factor that arose in England during the 1966 World Cup… Similarly, the 1974 World Cup, hosted and won by West Germany, helped to confirm West Germany's economic, social and political rehabilitation and success," said Boettcher.

Caution

Many Brazilians are less optimistic about the World Cup's positive economic impact, as the economy teeters on the brink of recession. Growth has declined significantly over the past few years. In 2013 the economy expanded 2.3 percent, down sharply from 7.5 percent in 2010. It's expected to grow around 1.8 percent this year.

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However, the Colliers International economists said the costs of running the event – which the BBC has estimated at nearly $15 billion – should be paid back into the economy over time.

"The cost per attendee is around $1,300, however, this doesn't take into account the positive revenues generated by broadcast deals, corporate advertising and merchandising. For many, hosting the event is considered as priceless," added Boettcher.

Around 600,000 tourists are expected to travel to Brazil during the event, injecting $3 billion into the economy, according to official estimates, but a drop in the bucket in context of Brazil's $2 trillion economy.

Not all analysts are convinced, however.

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Capital Economics published a note earlier this month arguing that the event will provide little boost to the economy because crucial structural problems are yet to be addressed.

Some locals might agree. Excessive spending on stadia and infrastructure and efforts to 'clean up' Brazil's slums has resulted in anti-World Cup protests and clashes with police.