It is Carnival this week in Brazil. The country comes to a virtual halt as millions of tourists and revelers go to the streets in cities like Rio de Janeiro, Recife and Salvador in a 4 day extravagant pre-lenten expression of popular music and culture. But this year it may be a little more difficult to celebrate. The Brazilian economy has been plagued by the worst recession in decades, unemployment is at almost 8%, there is a return of double digit inflation and there's a political corruption scandal involving the ruling party and Brazil’s largest corporation, Petrobras, with impending impeachment proceedings against its president, Dilma Rousseff.
And now Brazil can now add another serious plague to the list, the Zika virus.
Brazil is at the epicenter of this international public health emergency declared by the World Health Organization last week. More than 4,000 cases have been registered and confirmed as well as 400 cases of microcephaly, the neurological and congenital birth defect found in babies born from mothers infected by Zika. Microcephaly causes seizures, impacts the development of vision, speech, hearing and physical movement. People born with the illness will need special care for the rest of their lives and many are concerned that the already overburdened public health system in Brazil will not be able to provide quality services to special needs patients on a large scale. Scientists have begun working urgently to better detect and develop a vaccination against the virus. In the meantime, the efforts have been directed at combating the mosquito and eliminating its breeding grounds.
The human cost of this disease is extremely high. And there is concern that the Zika virus will unfavorably impact Brazil tourism industry which represented 9.5% of GDP in 2015 and employs over 3% of the country’s workforce. Rio de Janeiro’s Summer Olympics will cost approximately $10B. The city is counting on foreign tourists to attend the events, fill the hotels and provide a proper return on investment. But the Center for Disease Control recently issued a travel advisory for Brazil due to the Zika virus which does not help the tourism outlook.Top airlines carriers like United and American have also offered refunds to customers who wish to cancel or change their plans. Rio de Janeiro’s mayor Eduardo Paes reassured that he does not expect Zika to represent a threat during the Olympics in August as the mosquito does not breed in the winter climate.
The good news is that this year’s carnival seems not to have been affected. Hotel occupancy rates in Rio (85%) and Recife (93%) are higher than last year. The recently devalued Brazilian Real should also make Brazil cheaper and more desirable destination to foreign tourists. It is uncertain whether or not the Zika virus will be contained. So maybe it is ok to enjoy the Carnival this year until we know more about the situation.
By Glenn Stern - Finance Director, Fender Musical Instruments Corporation
Glenn's business background includes Latin American export sales, distributor management, business development and international subsidiary management. His segment and country experience includes consumer products, musical instruments, food, pharma and oil & gas in the US, Brazil, Argentina and Mexico. Glenn is a member of the global tribe at Global Chamber, and is fluent in Portuguese and Spanish.
Originally published at https://www.globalchamber.org/blog/2016/02/08/global-chamber/brazil-carnival-the-olympics-and-zika/
