No joke: Carnival, World Cup could hit Brazil growth in 2014

Tue Dec 17, 2013 11:42am EST
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By Brian Winter and Walter Brandimarte

SAO PAULO/RIO DE JANEIRO (Reuters) - A tongue-in-cheek "Brazilian 2014 Calendar" making the rounds on Facebook jokes that, because of the soccer World Cup, an unusually late Carnival, other holidays and a presidential election, real work will only be possible during three months next year.

But some people aren't laughing.

The unusual schedule could in fact cause significant damage to productivity and be a further drag on an economy that has already been spinning its wheels, some business leaders and economists say.

"I've heard many people say that 2014 will be a lost year. That's absurd, but if people believe it, I guess it will be true," said Paulo Motta, head of a retailers' union in the northeastern state of Bahia.

In a worst-case scenario, the "calendar effect" could shave as much as 0.3 percentage points off Brazil's gross domestic product next year, said Andre Perfeito, an economist at Gradual Investimentos in Sao Paulo.

Other economists consulted by Reuters said they thought any damage would be much smaller, while some said the effect was just too difficult to forecast.

What's clear is that, with Brazil's economy forecast to grow just 2.3 percent this year, and barely 2 percent in 2014, even a small hit to output is bad news.

The problems start early.   Continued...

An aerial view shows the construction of the Arena da Amazonia, or Vivaldo Lima Stadium, as it is rebuilt to host the 2014 World Cup, in Manaus August 2, 2013. REUTERS/Bruno Kelly