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The city of Porto Alegre is flooded after heavy rain in Porto Alegre, Rio Grande do Sul state, Brazil, Wednesday, May 8, 2024. (AP Photo/Andre Penner)

Brazil’s Rio Grande do Sul faces economic woes after floods, and an unclear path to rebuilding

Flooding in Brazil’s Rio Grande do Sul state ravaged nearly everything needed for economic activity, from local shops to factories, farms and ranches

By ElÉOnore Hughes
Published - May 23, 2024, 03:06 PM ET
Last Updated - May 27, 2024, 12:27 AM EDT

RIO DE JANEIRO (AP) — Flooding in Brazil’s Rio Grande do Sul state ravaged nearly everything needed for economic activity, from local shops to factories, farms and ranches.

The environmental catastrophe — unprecedented in state history — upended transportation, including the airport in capital Porto Alegre, which is expected to remain shuttered for months. Segments of major highways are closed due to landslides, washed-out roads and collapsed bridges. Blackouts continue to plague the state. Gov. Eduardo Leite has said Rio Grande do Sul will need a “kind of ‘Marshall Plan’ to be rebuilt,” although an exact strategy to do so in a way that reduces future climate disasters has yet to be determined.

The scale of devastation may be most comparable to Hurricane Katrina, which hit New Orleans in 2005, said Sergio Vale, chief economist at MB Associates. It has wrought havoc on services, production and sales, and many people are likely to lose their jobs, he said. Rio Grande do Sul’s economy — about as big as Uruguay and Paraguay combined — had been growing at 3.5% this year through April, but could end 2024 falling by 2%, according to his forecasts. That would mean a 0.4% dent in the nation's GDP, currently forecast at 2%. Bradesco is expecting a 4% drop, which would mean zero growth this year.

Most of the state’s 497 municipalities have been affected and financial losses already amount to 10 billion reais ($1.9 billion), the National Confederation of Municipalities estimated earlier this month. Some 94% of the state’s economic activity has been disrupted in some way, according to an estimate last week by the Federation of Industries of the State of Rio Grande do Sul.

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