Rio 2016: Moody's predicts positive short-term incentives in Brazil's economy after Olympics

Moody's, the international credit rating agency, estimated on Monday that the Olympic Games 2016 in Rio de Janeiro, from August 5 to 21, will bring positive results for Brazil although they will be short-lived.

Moody's announced through a press release that the sporting event will bring "lasting improvements in infrastructure as well as a temporal boost in tax revenue." However, it will not be enough to allow the South American country to overcome the profound economic crisis they are currently experiencing, according to the agency.

The credit rating agency calculated that during the Olympic Games, around 350,000 people will visit the Brazilian city which will have a positive impact on tax revenue but only in the short term.

"However, the general impacts from the Games will be minimal for most companies. They will see a temporary increase in sales and intangible benefits of marketing exposure at the Games," said Moody's.

For the agency, the Games will generate almost 7.1 billion U.S. dollars in infrastructure investments in Rio de Janeiro's metropolitan area. This figure will almost match the amount spent on the entire World Cup 2014 across 12 Brazilian cities.

"Olympic-related investments will drive long-lasting infrastructure improvements in public transportation and urban mobility for the host city," said Moody's.

The agency added that "a fourth metro line will connect the southern part of the city directly to the main Olympic Park in Barra (west), and the VLT light rail project will help revitalize Rio's downtown area."

According to the credit rating agency, bank "loans used to finance Olympics projects will have a limited impact, as the total loans to finance infrastructure and the athlete's village for the Games only amount to a small fraction of their outstanding loans."

"The Olympic boom for Brazil's engineering and construction companies, is already over as most of the construction projects are now either completed, or nearly completed," said Moody's.

In February, the company was the last of the major international ratings companies to strip the South American country of its investment grade after Standard and Poor's and Fitch previously removed Brazil's good payer seal.

The agencies opted to lower Brazil's rating due to the serious economic and political crisis in the country, whose economy contracted by 3.8 percent in 2015 and is predicted to contract by 3.86 percent in 2016, according to estimates from the financial market. Enditem