This blog post is the second entry in a 10-part series on traveling to Rio de Janiero.  Click here to view the first article.   

Among tourists, outdoor enthusiasts, and foodies alike, Rio de Janieiro is known for its miles and miles of beautiful beaches, wondrous landmarks, and gorgeous views.  However, to economists and businessmen, Rio is known for something entirely different. 

For many, many years, Rio de Janeiro, one of the primary destinations in Brazil for leisure travel, was considered a developing country in dire need of change.  In 1998, Brazil had a Gini Index, which measures the gap between the rich and poor, of 60.7 (4^th in the world) and a very large percent of residents lived in extreme poverty.  However, over the past several years, Brazil has done a lot of work to drastically reduce this gap, and in the past 8 years Brazil saw 13 million residents enter the middle class.  As a result, Brazil is a key target for foreign direct investment, and their economy has experienced an annual GDP growth of 5% over the past several years, and an astounding 7.5% in 2010 (read more about Brazil’s current economic situation).

However, it wasn’t until Rio won bids to host both the 2014 World Cup and 2016 that the country entered the worldwide center stage, and many people attribute their growing economy and infrastructure improvement opportunities as the primary reason it was granted the opportunity to host the two events.  Over the next 5 years, Rio will become a prime travel destination, and they hurriedly preparing to accommodate everyone. 

One of the downsides of Brazil’s economic growth (well, from the perspective of foreign tourists, anyway) are that things are expensive.  Over the past 10 or so years, Brazil experienced inflation rates of more than 2000%.  Additionally, US travelers used to enjoy a 4 to 1 exchange rate, however, it has since dwindled to 1.6R to 1USD.  Given these two elements combined, it has been estimated that the Brazilian currency is overvalued by about 40%.  To put it in plain English – Brazil is expensive.  Not only the flight, which will put you back about $2 – 3000 from most US locations, but actually being in the country is expensive as well, contrary to popular opinion that it is cheap because it’s a developing country.  But trust me – it’s worth it.     

In terms of tourism, about 5 million people per year visit Rio de Janeiro.  Over the past 10 or so years, Brazil has experienced steady growth in international tourism revenue (close to about $6 billion in annual revenue today), but during the past few years the actual number of people visiting Brazil has stabilized around 5 million.  But this number is expected to grow exponentially over the next several years, as the city readies itself to host two of the hottest global events.

One of the drawbacks to Rio de Janeiro, especially considering its expected growth in tourism, is the limited number of guests the city can feasibly accommodate at one time.  It is estimated that the city can only host about 28,000 tourists at any given time.  The limited supply of housing may cause increased prices, however, as I mentioned earlier, the city is working to at least double the number of tourists it can accommodate in preparation for the upcoming World Cup and Olympic events. 

So, in light of all that’s going on in Rio on the economic front, why go?  Rio is an excellent place to consider as a travel destination for many different reasons – it is a great place to go if you’re looking to relax and enjoy the beaches and scenery, or if you’re a student or interested in economic development and want to study the economic growth in Brazil, or if you’re an adventure-seeker and are looking to enjoy extreme activities.  And of course, Rio is an excellent place to go surfing.

And why did I like it?  I’ve traveled to many, many countries, and I’m getting to the point where, when I go to big cities, I typically feel like its “just another big city.”  What I liked about Rio is that it’s different, and just a little bit edgy.  It still maintains a certain amount of culture, despite being one of the most popular destinations for tourists in Brazil, and the people are nice, friendly and welcoming, which is something you really don’t see these days in most large cities.  But beware – As Rio is still a developing country, there is still a lot of poverty, and crime rates are high.  For the most part, as a tourist, you can avoid impoverished areas, but even I was surprised at the amount of poverty that still exists in the country.  Regardless, there is so much to do and so much to see, that Rio de Janeiro is well worth the trip.