Recession forces Rio shops to close before Olympics

Global Business

Recession forces Rio shops to close before Olympics

With less than 40 days before the 2016 Summer Olympics kick off, many of Rio de Janeiro’s shop owners are closing their businesses. The so-called marvelous city recently declared a state of financial emergency as the country faces one its worst recessions in decades.

CCTV America’s Lucrecia Franco in Rio has more. Follow Lucrecia C. Franco on Twitter @LucreciaFranco

Asta, a handmade design shop in Ipanema, one of Rio’s most affluent neighborhoods, is shutting its doors in one week. Asta sold arts and crafts made mostly by poor women artisans.

Rosane Rosa, one of the owners, hung a sign inside the shop to explain her clients why she’s closing. Asta has been losing a lot of money in this recession. It’s debts reached the equivalent of $90,000.

“We used to say that whoever is in Ipanema was on the spotlight,” Rosa said. “So now we’ve been forced to lose that visibility for Brazilians and foreigners. Not being able to tell the story of 600 craftswomen-that hurts.”

Rosa isn’t alone. Three shops located on the same street have already closed and many others in the high-end neighborhood are struggling to survive, offering discounts and all sort of special promotions.

According to Rio’s Chamber of Shop Owners, more than 2,000 businesses closed down in the first three months of 2016. A trend, they said, caused mainly by rising unemployment.

“We had a 25 percent drop in consumption last Christmas,” Carlos Monjardim said. “Today, businesses in Rio account for 70 percent of jobs and, with the recession we are facing, more people are losing their jobs and spending less.”

In mid-June, the state of Rio de Janeiro declared a state of financial emergency and will receive a loan of $850 million from the federal government to pay for public services ahead of the Olympics.

Eager to preserve the income of her craftswomen suppliers and save her business Rosa said she’ll sell online and in other outlets, until Brazil’s economy improves. But she doesn’t expect the economy to turnaround anytime soon.