Brazil’s service sector grew for the third straight month in April, fueled in part by strong transport demand associated with Lady Gaga’s giant concert in Rio de Janeiro, the national statistics agency IBGE said Friday.
Gaga’s free show on Copacabana Beach on May 3 that attracted an estimated 2.1 million fans appears to have had a preliminary effect on the economy, via travel and ticket purchases made in advance.
IBGE said that, despite the event taking place in May, the preparation for the show probably affected the April numbers.
The services sector grew by 0.2% month-on-month in April, continuing to show resilience despite Brazil´s high interest rates, which are stuck near a 20-year high of 14.75%.
The sector saw a 1.8% rise year on year, which was about in line with economists’ expectations.
Concert crowds drive travel surge
The transportation industry stood out as a major contributor to April’s growth, rising by 0.5% month on month.
It was the only one of the five major service groups tracked by IBGE to produce a positive result over the period.
Airlines and travel providers had earlier reported an increase in bookings due to the concert, resulting in additional flights and near-capacity operations at Rio de Janeiro’s principal airports.
The rush of domestic and international tourists, many of whom planned their journeys weeks, boosted demand for air travel, road transportation, and logistics services.
IBGE observed that concert-related purchases, such as travel and lodging, were most likely made in April, influencing the sector’s performance.
The agency also mentioned that Brazil’s national holiday on May 1 may have prompted early travel and spending.
Mega-events support local economies
The concert was billed by Rio’s city government as part of its wider strategy of attracting big international names to perform for free, in front of the public.
Local authorities state that events of this scale generate significant income for local businesses, including hospitality, tourism, and transport.
It isn’t the first time a foreign pop tour has had detectable economic impacts in Brazil.
In December, IBGE recorded a similar spike in services associated with Taylor Swift’s six-show “Eras Tour” across large Brazilian cities that prompted a national travel and spending frenzy.
These events are high-profile and are a tangible offset to some of the macroeconomic forces currently grappling Brazil.
Despite slowing GDP growth and increasing borrowing costs, the economy’s largest sector, services, remains strong.
The outlook remains cautious amid high rates
Despite the excellent April numbers, Brazil’s overall economic outlook remains cautious.
With the central bank’s benchmark interest rate of 14.75%, financing costs continue to hinder growth in consumer consumption and investment.
Nonetheless, the ongoing development in services, notably in transportation and tourism-related sub-sectors, demonstrates the enduring relevance of non-structural drivers such as large-scale cultural events.
These can provide a short-term stimulus and assist in offsetting stagnation in other sections of the economy.
The latest IBGE analysis highlights how entertainment and travel demand, even before the event dates, can have a direct impact on economic indices.
While April’s overall expansion was modest, it represented a consistent trend that could carry forward into future months if comparable events occur.
As Brazil enters the winter season and additional concerts and festivals are planned in key cities, observers will be looking to see if the service industry can maintain its upward trend despite ongoing monetary tightening.
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