Rio Grande Do Sul Floods: A $17 Billion Economic Downfall For Brazil
Date
7/26/2024 5:00:07 AM
(MENAFN- The Rio Times) This year, unprecedented floods ravaged Brazil's Rio Grande do Sul region, inflicting severe economic damage.
The CNC reports total losses of R$97 billion ($17 billion), with the state accounting for R$58 billion ($10.3 billion). Other regions have incurred losses of R$38.9 billion ($6.89 billion).
These floods could cut up to 9.86% from the state's GDP and threaten nearly 305,000 jobs across local and surrounding areas.
This puts major employment sectors at risk. The disaster will likely affect inflation and fiscal dynamics across Brazil, underscoring the urgent need for protective measures in commerce, services, and tourism.
Daily floods result in commerce losses of R$5 billion ($885 million), representing 31.5% of the projected revenues for May.
The floods also severely impact infrastructure and supply chains, leading to an expected 28% reduction in cargo traffic.
Tourism is severely hit, with daily losses potentially exceeding R$49 million ($8.7 million). These could total R$2 billion ($354 million) by mid-year and may escalate to R$6 billion ($1 billion) annually.
The transport sector, crucial for tourism, faces challenges due to closed airports and highways.
Agriculture and industry suffer greatly, as the state is a major rice producer and vital in machinery, chemicals, and vehicle manufacturing.
In response, the CNC outlines several recovery strategies. Federal aid totals R$65.1 billion ($11.5 billion) for grants, credit, and infrastructure rebuilding.
Rio Grande do Sul Floods: A $17 Billion Economic Downfall for Brazil
Employment strategies reduce work hours and salaries, suspend contracts temporarily with pay, and expand remote work options.
The report highlights the need for credit, proposing a payroll standstill, tax debt renegotiation, and ending BNDES loan spreads.
It suggests deferring Simples Nacional and federal taxes for six months, and additionally, starting the Perse Program to enhance Rio Grande do Sul tourism until 2027.
These approaches seek to drive Rio Grande do Sul's recovery and reduce the broader effects of this environmental crisis.
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