Floods in Brazil 2024

flooded city

To assess the economic consequences of the floods in Rio Grande do Sul, Brazil, look for a comparable event abroad, such as the devastation caused by Hurricane Katrina in the United States in 2005. The floods in Brazil in 2024 are proving catastrophic. .

In this article we are going to tell you everything you need to know about the consequences of the floods in Brazil in 2024.

Brazil floods of 2024

the worst floods

According to economist Sergio Vale, who works at MB Associados, a consulting firm specializing in monitoring the economic repercussions of climate events, Brazil is currently experiencing an unprecedented level of economic devastation. The recent flooding has caused significant damage, surpassing any previous weather-related incident in the country's history.

The impact of Hurricane Katrina on the Louisiana economy resulted in a 1,5% contraction, a significant deviation from the projected 4% growth for that year in the United States.

According to MB Associados, Rio Grande do Sul's economy is expected to experience a 2% contraction, a significant change from the 3,5% growth it had experienced in the 12 months prior to April.

Furthermore, the nationwide consequences will almost certainly be significantly more substantial compared to the impact seen during Katrina in the United States, given that the economy of Rio Grande do Sul represents approximately 6,5% of Brazil's GDP.

According to MB Associados, Brazil was initially projected to experience a growth rate of up to 2,5% for the current year. However, after the unfortunate incident in Rio Grande do Sul, the growth projection was revised to 2%.

Other crises in Brazil

brazil floods 2024

Throughout its history, Brazil has faced several major crises that have had a profound impact on the development of its economy.

In one case, in 2001, a drought played a role in an energy rationing crisis and subsequent blackouts. Unlike the growth From 4,4% the previous year, the national economy experienced a significant slowdown, reaching only 1,4%. While drought played a role, the central problem behind the 2001 crisis was not climate-related. Rather, it was mainly caused by obstacles in the distribution networks, which prevented the efficient distribution of energy throughout the country.

The recent tragedy in Rio Grande do Sul, which left a devastating death toll at least 149 people, is expected to affect multiple aspects of the Brazilian economy, including GDP growth, the agricultural sector and public accounts.

Flood damage

floods in brazil

According to economists and studies, the precise economic impact of the ongoing rains cannot be accurately measured at this time, as the rains are still continuing and a comprehensive damage assessment has not yet been carried out.

The lack of clarity when defining the situation also has political consequences. Authorities have mentioned several measures and resource allocations for Rio Grande do Sul, but the details of this assistance are still under deliberation, leaving the figures uncertain.

According to a study released by the Federation of Industries of the State of Rio Grande do Sul (Fiergs) On May 14, floods significantly affected 94,3% of economic activity in Rio Grande do Sul.

According to Arildo Bennech Oliveira, interim president of Fiergs, the main industrial centers of Rio Grande do Sul are among the most affected areas, affecting crucial sectors of the state's economy.

Brazil's economic activity receives a significant contribution of R$ 220 billion (US$ 42,83 billion) from three large regions, namely the Metropolitan Region of Porto Alegre, Vale dos Sinos and Serra. A total of 23.700 industries are concentrated in these three regions, which They employ a workforce of 433.000 people.

The Sierra Region, known for its cities such as Caxias do Sul, Bento Gonçalves and Farroupilha, has gained recognition for its important contributions to the metallurgical and furniture industries, particularly in the production of vehicles, machines and metal products.

In addition to the manufacturing of metal items such as vehicles, auto parts and machines, the Porto Alegre Metropolitan Region also has a thriving oil and food products production industry. Meanwhile, The Vale dos Sinos region has gained fame for its exceptional footwear production.

Impact on the economy

The impact of the economic crisis spread beyond a single industry. Sectors such as tobacco and chemicals also experienced significant effects. According to a study conducted by Bradesco, the crisis in Rio Grande do Sul has the potential to cause a reduction in national GDP growth of approximately 0,2 to 0,3 percentage points.

In contrast, during the year the state was hit by a cyclone in 2008, the state's GDP growth was 2,9%, while Brazil's overall growth rate was recorded at 5,1%.

The National Confederation of Municipalities conducted an additional study that suggests that the financial losses resulting from the floods exceed R$ 8,9 billion (equivalent to US$ 1,732 million).

According to the CMN, the total loss amounts to 1.730 million dollars, of which 467 million affect the public sector, 370 million the private productive sector and a significant amount of 895 million dollars are attributed to the destruction of homes. The agricultural sector has also been heavily affected.

Within the realm of Brazilian agriculture, Rio Grande do Sul stands as a formidable force, representing 12,6% of the country's agricultural GDP. According to Bradesco, the floods will have a significant impact on Brazilian agriculture, making it one of the most affected sectors of the economy.

According to a report from a financial institution, the possible consequences of these factors could result in a 3,5% drop in Brazil's agricultural GDP, exceeding the previous estimate of a 3% decline. The impact on agribusiness could be further exacerbated by logistical challenges, which prevent the smooth transportation of harvested crops and the timely arrival of necessary resources. It seems that this issue is especially worrying for the dairy and meat industries.

In Brazil, Rio Grande do Sul is responsible for an important part of the country's agricultural production, including 70% of rice production, 15% of meat (12% chicken and 17% pork), 15% of soybeans and 4% of corn agricultural production.

Last week, the floods had an impact on some world prices: The price of soybeans on the Chicago Stock Exchange increased by 2%. In Brazil, the cost of rice has already increased, prompting the government to declare the importation of this essential staple food to mitigate the potential impact. There are concerns that chicken and pork prices will follow suit in the near future.

Fortunately, harvesting of 70% of the soybean crop and 80% of the rice crop had already been completed. Two questions now remain: to what extent the flooding affected the remaining crop and whether grain already collected and stored in silos was compromised or remained intact.

If the worst-case scenarios prove true, Bradesco predicts that approximately 7,5% of rice production and 2,2% of soybean production in Brazil could face potential disruptions.

I hope that with this information you can learn more about the floods in Brazil in 2024 and their consequences.

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