Rio de Janeiro will lose around R$5.5 billion in 2021 due to the cancellation of carnival, according to a study by researchers Claudio Considera and Juliana Trece at Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE). This is equivalent to 1.4% of the city’s economy. That may not seem much, but by way of comparison, the Family Grant welfare program – which is very significant, especially in the ongoing pandemic – is equivalent to 0.5% of Brazil’s GDP.

“Rio de Janeiro is a city with a strong vocation for tourism and events are very important for this sector, for the service sector and for the economy as a whole. In order for these annual festivities to happen at the beginning of each year, there are thousands of professionals who work year-round, but they lost all their income in 2020 when everything stopped. In other words, this event drives the economy, generating jobs and income,” says Considera, an associate researcher at FGV IBRE.

According to the study, if carnival had not been cancelled because of the pandemic, Rio’s economy would receive a R$4.4 billion boost from spending by Brazilian tourists (who make up 88% of tourists, stay for 6.6 days and spend R$280.32 per day on average) and foreign tourists (who make up 12% of tourists, stay for 7.7 days and spend R$334.01 per day on average). There would also have been spending of more than R$1 billion by residents of the city and its metropolitan area, as well as operational spending.

Economist Juliana Trece says that the speed of the economic recovery will depend on the vaccination calendar. “Vaccinating the population is important for the health of Brazilians and also for the health of the economy. The quicker we can get things back to normal, the faster we will see a more consistent economic recovery,” she says.

The calculations were based on data from 2018 and 2020, including a study carried out by FGV for the Tourism Ministry, assuming equal numbers of foreign and Brazilian tourists, the same length of stay and equivalent average spending.