It's a challenging moment in Brazil. The largest corruption scandal in the nation's history has battered an economy already in recession and incited widespread protests. With unemployment on the rise, Brazil's currency in free-fall and surging crime in the cities, Brazilians are not surprisingly pessimistic about the future. There is hope, however, that the 2016 Olympic Games will bring a boost to the economy – and to the nation's spirits.

Historic Election

Brazil has long grappled with corruption. Embezzlement, bribes and money laundering occur with dispiriting frequency in a country ranked 69th in the world for its perceived level of public corruption. Yet even a people accustomed to this pervasive problem were shocked at the vast size of the scandal that recently came to light. In 2014, an undercover investigation by Brazilian police unearthed a colossal kickback scheme tied to Petrobras, Brazil's massive state-run oil company.

Prosecutors allege that top officials from Petrobras colluded with a cartel of companies to overcharge on contracts, with jaw-dropping sums of money being funneled to the governing Workers' Party. The kickbacks, which allegedly began in 2004 when former president Lula was in office, total a whopping US$3 billion. The reach of the scheme boggles the imagination, and involved phantom corporations, Rolex watches, yachts, prostitutes and helicopters, with one elderly man flying huge bricks of cash around the world (sometimes as much as 500,000 euros at a time).

Deep-rooted Corruption

The scandal has already brought down major titans of industry and high-ranking government officials. By late 2015, some 117 indictments had been issued, five politicians arrested and criminal cases brought against over a dozen companies. The fallout is damning for the ruling Workers' Party, which no one expects to survive the next major election. Many Brazilians also believe that President Dilma Rousseff was also involved. She chaired the board of Petrobras for seven years, during the period when many of the bribes are believed to have occurred. Although she was quickly cleared of any involvement in the scheme, Brazilians have taken to the streets in massive protests calling for her impeachment. By late 2015, Dilma's approval rating had fallen to 8%, a historic low. In the turmoil, even once-close allies are abandoning her (including the vice president), and with impeachment a very credible threat, Dilma's days in office may be numbered.

Economic Woes

Enormous repercussions from the scandal have sent shockwaves far and wide. It has affected the GDP, unemployment, and inflation, not to mention foreign investment. One study released in 2015 estimated the price tag of the corruption scandal at R$87 billion – about 1% of Brazil's GDP – owing to reductions in investments and layoffs in construction (two construction companies that colluded with Petrobras filed for bankruptcy). In September, Standard & Poor's downgraded Brazil's sovereign credit rating to junk status. Meanwhile Brazil's currency, the real, remains on a downward spiral, falling (40% in 2015) to its lowest point in two decades. In other discouraging news, by late 2015, Brazil's stock market was down 20%, unemployment had reached a five-year high and the overall economy was on track to shrink by more than 2.5% by the year's end.

A Glimmer of Hope

One glimmer of hope is the Summer Olympic Games of 2016, being held in Rio de Janeiro. Eduardo Paes, Rio's mayor, is betting big. His wager: that a wealth of private and public investment showered on the city will pay off, much as it did for Barcelona after its Olympic games. Since 2009, Rio has been hard at work revitalizing formerly derelict parts of town. The epicenter of Rio's rebirth is the Porto Maravilha (Marvelous Port), an astounding 5 million square meters of waterfront near downtown that now boasts new museums, green spaces and live-work spaces.

After more than US$1.7 billion of investment and seven years of construction, the project is nearing completion. The unsightly elevated highway that once marred the skyline has been torn down and replaced by tunnels, with new parks laid over the top. A new high-tech light rail will travel along 26km of rails through downtown, looping past the striking Praça Mauá, with its two new grand museums. Picturesque colonial buildings, forgotten beneath years of grime, have been restored, while new bike lanes and waterfront walking paths connect the district with other parts of downtown.

Even more impressive is the Herculean R$8 billion expansion of Rio’s metro system: a 17km extension running from Ipanema to Barra that will carry an estimated 300,000 passengers a day. Engineers and laborers have been working around the clock to meet the 2016 deadline.