The global economic crisis has begun to affect Brazil, with mass lay-offs and budget cuts. The latest victim of the crisis is Rio de Janeiro’s world famous Carnival celebration.

First, price increases are hitting the samba schools hard. Materials used to create costumes and floats have are now much more expensive after a 7% increase in the price of steel and a 30% increase in the price of imported fabric.

Next, Petrobras, the state-owned oil company, usually donates US$5.1 million to the Rio samba school league. This year, the donation isn’t happening. One samba school, Grande Rio, managed to get a US$2.2 million donation from the French city of Niza, since its theme this year is about France. The city of Rio donated US$1.7 million, which was delayed, and the Rio state government will donate approximately $2 million to each samba school.

Also, Carnival is a time when people dress up in costumes, like on Halloween. One of Rio’s major costume supply stores, Casa Pinto, experienced a 15% decrease in sales this year, along with price increases for materials for costumes. Also, carnival mask producers experienced a drop in export sales, from 30,000 masks last year to just 5,000 this year.

Finally, Carnival is high tourist season in Rio when hotels fill to maximum capacity. But this year, hotels expect a 20% drop in hotel occupation during Carnival.