Games not cure-all for Brazil

An aerial view shows the Christ the Redeemer statue with the Maracana stadium, where the opening cermony of the Rio 2016 Olympic Games will be held, in Rio de Janeiro, Brazil, July 16, 2016. [Photo/Agencies]

The Rio Olympics is expected to help boost the Brazilian economy at a time when Brazil is suffering an economic slump as a result of low commodity prices, exacerbated inflation and capital flight since 2014.

Since the 1984 Los Angeles Olympics, host countries have economically benefited from organizing the world's largest sporting event, the only exception being Greece with the Athens Olympics in 2004.

The huge economic effects produced by the participation of a record 13,000 athletes and 500,000 visitors, along with the long service chain needed for the games, are expected to be enough to cover all the money Brazil has spent on hosting the games.

The sporting event is also expected to bring Brazil some long-term economic benefits. Some 64 percent of the total $11.6 billion Brazil has spent on the Olympic Games has been used for the building of infrastructure such as subways and rapid transit bus lines, which are badly needed for the development of the Brazilian economy.

At the same time, the Rio Olympics has also given a boost to Brazil's capital market, which has risen 30 percent since the beginning of this year, in stark contrast to its lackluster real economic sector.

However, the Olympics is surely not a panacea to Brazil's long-standing economic ailments. Its economic development still depends on substantial efforts to eradicate its over-reliance on bulk commodities and promote the development of manufacturing and infrastructure, which are problems Brazil was not motivated to address when high commodity prices brought it huge economic returns.

How to reduce corruption and change the government's credibility crisis caused by economic difficulties remains a challenge to the South American country. Also, Brazil is yet to ease the negative effects on its real economy resulting from the premature suspension of its capital account regulations, which has added fluctuations to its fragile capital market.