Rio Floods: Fixing Favelas and the Future

At least 170 people died after a week of heavy rain prompted mudslides and floods in Rio de Janeiro state. More than 50 houses were engulfed as mud and rubble poured into the Morro do Bumba favela near Rio de Janeiro. The shantytown was built on top of a disused landfill which makes it prone to landslides.

Most of the victims were swept away in landslides that roared through favelas (slums) built on steep, unstable hillsides. The tragic affects of the floods do not touch tourist areas.

With the images of the deadly mudslides and flooding in Rio de Janerio circling the globe, the Brazilian government has sought to preempt any ideas that rains risk turning the preparations or the 2014 soccer World Cup and the 2016 Olympic games themselves into debacles.

In a conference call with international reporters this week Brazilian Planning Minister Paulo Bernardo said funds were being marshaled to repair damages from the flooding in Rio and elsewhere (other Brazilian population centers have also been lashed by floods lately). In the call, Bernardo said 7 billion reais ($3.9 billion) had already been set aside for recovery of flood-stricken areas as part of the government’s pro-economic growth package.

He also said that investments will be made in sanitation, housing and infrastructure so that Rio and other cities will be better prepared for heavy rains in the future.

“So the government is not predicting—is not foreseeing any type of major hindrance or disaster in this regard because all the measures are being taken … We do not foresee any natural disasters … during the World Cup or the Olympic Games because … they will be held … outside the rain season in Rio de Janeiro particularly.”

On Thursday, the government also announced it was dispatching some $100 million in emergency funds as well as a new fleet of ambulances and medical systems to help Rio de Janeiro cope with the impact of the flooding.

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Brazil to Become Top Property Market

Brazil is set to become one of the hottest property markets of 2010. As one of the world’s fastest growing economies, Brazil has seen a large increase in Foreign Direct Investment. With the country set to host the 2014 football World Cup and 2016 Olympic Games, there will be improvements in infrastructure and huge growth in the construction industry.

Foreign investors are flocking to Brazil to view prime properties with world class views, snatching up real estate in anticipation of future capital growth.

Brazil Property Specialist, Colordarcy have seen Brazilian property enquiries increase by 60%, since the Olympic announcement. The company has responded by launching a consultancy service to help clients to source the best real estate deals in Rio de Janeiro.

Loxley McKenzie, Chief Executive at Colordarcy – is predicting an annual increase of 20% per year until 2016.

Mortgages will soon be available to international buyers and this will create a further boost to Brazil’s property market.

Investment banking firm Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India and China) nations over the next few years.

Brazil’s economy is widely expected to become the fifth largest in the world by the time the Olympic Games kicks off in 2016, and yet property and land prices still remain a fraction of those found in more developed nations.

The Brazilian president Luiz Inacio Lula da Silva has already pledged to spend up to £11.5bn ($17.4bn) on building a million new homes in Brazil between now and 2011.

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Brazil’s Unemployment Rate Continues to Drop

Brazil’s unemployment rate dipped again in October, this time returning to pre-crisis levels and hinting at a strong rebound ahead for Latin America’s biggest economy.

The jobless rate fell to 7.5% in October, the same as in October a year ago and slightly below forecasts, the Brazilian Census Bureau, or IBGE, said Thursday. Unemployment was 7.7% in September, down from 8.1% in August.

Jankiel Santos, an economist at Sao Paulo’s BES Investimentos fund, said October’s data reinforced the view that “labor market conditions remain quite favorable and should lend a hand to the Brazilian economy to keep on expanding in coming months.”

IBGE October data also showed average real incomes were 3.2% higher than October last year, indicating that the number at work enjoyed higher spending power and could thus more easily contribute to Brazil’s consumer boom.

Cimar Azevedo, IBGE director for employment data, pointed out that the average formal employment rate was 44.9% of the workforce in the January through October period, higher than the 44.4% level in the year-ago comparison.

October’s jobless rate declined for a third consecutive month, pointing to a steady rate of economic recovery, with better prospects ahead in the run-up to Christmas.

Roberto Padovani, chief Latin American strategist for WestLB Bank, predicted a strong rebound for Brazil in 2010, with economic growth reaching 4.8% after a 0.2% decline in 2009. “The expansion expected for next year will be fueled mainly by domestic consumption,” Padovani said.

November and December employment figures will likely be lifted significantly by the festive season, said Azevedo.

Last December the unemployment rate was just 6.8%.

But this year, significant tax breaks on consumer durables along with easier credit facilities and conditions should create even more work, especially in retail.

More employment opportunities are expected to be created in Rio with the upcoming influx of tourism expected to occur in the next few years due to the FIFA World Cup and the 2014 Olympics. Plans to improve upon existing venues and infrastructure as well as new constructions for these events will have a large effect on the economy.

The recent success of Brazilian oil and gas company OGX Petroleo e Gas Participacoes SA is also set to bring many more employment opportunities to the city.

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