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Brazil Braces for More Rain as Historic Flood Damages Mount

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The south of Brazil is preparing for the arrival of new rains and colder temperatures that threaten to deepen a crisis created by the historic floods that have deluged the region.

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As much as 300 millimeters (11.8 inches) of rain are forecast to fall on parts of the state of Rio Grande do Sul by the end of the weekend, Brazil’s national meteorological service estimates, potentially exacerbating the floods that have left at least 116 people dead, more than 337,000 displaced and roughly half-a-million without electricity or clean water.

It is the latest major natural disaster to hit Brazil, a nation that has endured intensifying storms and weather events. Rio Grande do Sul, a key agricultural hub home to 11 million people, has faced flooding multiple times in the last year, and preliminary estimates from Enki Research suggest that the economic toll of the current crisis could reach $2.5 billion.

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Brazilian Floods Are Inflicting Billions in Economic Devastation

But officials have cautioned that it won’t be possible to assess the full scope of the tragedy until after the floodwaters recede, and have focused their efforts on mitigating the damage additional rainfall is poised to deliver.

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Some municipalities have ordered evacuations amid worsening forecasts, while local authorities closed roads and bridges they deemed at risk of collapse. The state’s governor, Eduardo Leite, on Friday warned residents against trying to return to their homes.

“There is a prospect of rains causing river levels to rise again,” Leite said during a news conference. “That’s why we’re appealing to people not to return to risky areas.”

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The disaster has kicked off a nationwide effort to deliver aid to Rio Grande do Sul, the country’s southernmost state. President Luiz Inacio Lula da Silva, who traveled to the area last Sunday, on Thursday unveiled a relief package worth 50.9 billion reais ($9.9 billion) while pledging to roll out additional measures next week.

Those will likely include help for informal workers — like Uber drivers and street vendors — who require special attention because they won’t benefit from provisions in the original package, according to a person familiar with the plans who requested anonymity to discuss internal matters.

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Late on Saturday, the federal government published a decree authorizing the immediate release of 12 billion reais in budget funds to assist victims in the region.

Across the country, teams of volunteers have assembled packages of food, water and basic goods to send to the area, where running water is not reaching many homes and what little is available has been directed to hospitals. Supermarkets have restricted sales to 5 liters per person, per day to avoid a complete collapse of the water supply.

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Local residents — many of whom have been driven from their homes — are also racing to help each other at a time when the closing of key highways and Porto Alegre’s international airport have made it difficult to deliver aid across a state that is larger than the UK.

Civil defense authorities rescued Fabio Praxedes from his home on the shores of the overflowing Lake Guaiba last Saturday. Since relocating to his parents’ house, he has joined search operations for the more than 140 people who are still missing.

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Together with friends and family, Praxedes said he now spends each day preparing 1,500 boxed lunches to deliver to neighbors in an area where markets and stores are almost all closed.

Economic Damage

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The floods have consumed Lula’s government and captivated the nation. Analysts, meanwhile, are watching for clues about how the fallout will affect Latin America’s largest economy as a whole.

Rio Grande do Sul, a large producer of rice, soy, poultry and pork, is responsible for about 6.5% of Brazil’s gross domestic product, and the floods temporarily shuttered factories, processing plants and major businesses across the state.

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XP Asset has already cut its 2024 growth estimate for Brazil to 2.1% from 2.4% because of the crisis, while cautioning that the impact may grow if the state’s agricultural sector takes an even larger hit than expected.

A majority of the area’s rice and soy harvests had been completed before the torrential rains began, but the floods will reduce the country’s soybean crop by 3 million tons this year, StoneX Group Inc estimated Friday. It is too early to assess the effects on livestock and other crops; the rebuilding effort, meanwhile, could ultimately help offset the negative short-term GDP impact.

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Residents and volunteers help with rescues through floodwaters in Canoas, Rio Grande do Sul state, Brazil, on Sunday, May 5, 2024. Photo credit: Carlos Macedo/Bloomberg

Porto Alegre’s weight in the country’s total inflation is 8.6%, heavier than all but three other state capital regions. Analysts at Itau foresee an increase of 0.4 percentage points in annual inflation largely due to effects on rice and soy, they wrote in a note to clients this week.

Vanelise Chaves, who owns a pizza company with her husband in the hard-hit city of Canoas, is already feeling the crunch. She normally sells products in Porto Alegre, but the floods have made the 10 miles (16 kilometers) of road between her city and the state capital impassable.

Chaves has used the ingredients she has on hand to maintain a small slice of her normal production, while also making sandwiches and lunch packages to distribute in her community. But sales are down 80%, and Chaves said she is paying 30% more for increasingly scarce tomatoes than she was before the rains began.

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Photograph: A flooded street following heavy rains in Porto Alegre, Rio Grande do Sul state, Brazil, on Monday, May 6, 2024. Photo credit: Carlos Macedo/Bloomberg

Copyright 2024 Bloomberg.

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