Carnival, World Cup could hit Brazil growth in 2014

SAO PAULO/RIO DE JANEIRO (Reuters): A tongue-in-cheek "Brazilian 2014 Calendar" making the rounds on Facebook jokes that, because of the soccer World Cup, an unusually late Carnival, other holidays and a presidential election, real work will only be possible during three months next year.
But some people aren't laughing.
The unusual schedule could in fact cause significant damage to productivity and be a further drag on an economy that has already been spinning its wheels, some business leaders and economists say.
"I've heard many people say that 2014 will be a lost year. That's absurd, but if people believe it, I guess it will be true," said Paulo Motta, head of a retailers' union in the northeastern state of Bahia.
In a worst-case scenario, the "calendar effect" could shave as much as 0.3 percentage points off Brazil's gross domestic product next year, said Andre Perfeito, an economist at Gradual Investimentos in Sao Paulo.
Other economists consulted by Reuters said they thought any damage would be much smaller, while some said the effect was just too difficult to forecast.
What's clear is that, with Brazil's economy forecast to grow just 2.3 percent this year, and barely 2 percent in 2014, even a small hit to output is bad news.
The problems start early.
Traditionally, the Brazilian summer vacation season stretches from Christmas into January and beyond. While some work gets done, meetings are difficult to schedule and many Brazilians say, only half-jokingly, that the business year doesn't start in earnest until Carnival ends.
This year, Carnival ended on February 12. But in 2014, because of the lunar calendar that dictates the pre-Lenten festival's timing, its last day will be March 4. That means many Brazilians will extend their vacations, or at least keep "summer hours" for an extra few weeks.
When Brazil's team played, offices and factories around the country traditionally closed down so that employees could watch  TV.
But those won't be the only lost hours this year. A law passed last year gives the 12 cities hosting World Cup matches, and the states where they are located, the right to declare special holidays on game days.
Brazil's biggest stock exchange operator, BM&FBovespa SA (BVMF3.SA), has said its trading calendar could be affected .
A study of about 20 leading Brazilian corporations this year by Fundação Dom Cabral, a business school, found that all of them plan to defer business travel during the Cup because of possible airport chaos and other distractions.
David Beker, chief economist for Brazil at BofA Merrill Lynch, said some manufacturers may accelerate production early in the year to help offset the expected World Cup lull.
A last-minute rush of construction on Cup-related infrastructure could end up boosting the economy, although economists expect it to fall well short of the building bonanza the government was touting just a few years ago.