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Will Argentina's economy benefit after winning the world title?

2022-12-21 17:54:06Biznes SHKRUAR NGA REDAKSIA VOX
Will Argentina's economy benefit after winning the world title?
Will Argentina's economy benefit after winning the world title?

Even before the final match, Qatar has scored big gains. But what about the Argentinians? Will this country benefit from winning the World Cup title?

The 2022 World Cup in Qatar ended with a spectacular duel between Argentina and France. The host country, Qatar, will feel the legacy of this tournament for decades, experts believe. The organization of the championship was praised by many guests - including those from the West, where the country was criticized for its lack of respect for human rights or the situation of workers there.

In the past, experts have repeatedly researched the effects of hosting major sporting events (such as the Olympic Games or the World Cup in soccer) on the host country's economy. At the same time, the proven economic effects (and ultimately profit) were less than expected. While the effect of the organization itself was short-term. Fewer studies have been devoted to how winning the World Championship affects the country where the world champions come from?

Increase in gross output

Five different nations have won the best team titles in the last seven championships: Brazil (1994, 2002), France (1998, 2018), Italy (2006), Spain (2010) and Germany (2014). In six out of seven cases, the country that won the championship had a higher GDP growth in the year of the tournament than in the following two years.

In 1994, Brazil had a record economic growth of 5.9 percent. A similar thing happened in 2002 - when Brazil was better than Germany in the final. Brazil's economy this year has grown by 3.1 percent. Significantly higher GDP growth than the year before (1.4%) or the year after the tournament (1.1%).

In 1998, France won its first World Cup title as hosts. The national economy that year grew by 3.6 percent – ​​significantly more than in 1997 or 1999. But something was different in 2018, when the French won their second World Cup title. The French economy that year recorded slightly weaker growth (1.9%) than in the year before the championship (2.3%).

Italy's success at the 2006 World Cup was accompanied by a GDP growth of 1.8 percent, which means a higher growth than the year before (0.8%) and the year after the tournament in Germany (1.5%). ). The "World Cup effect" was also felt in Germany in 2014, when the national economy grew by 2.2 percent, which was significantly higher than in 2013 (0.4%) or 2015 (1.5%).

While in 2010, the Spanish won the first title of the world championship. In that year, which was marked by a major economic crisis, the Spanish economy grew by 0.2 percent. A year before the tournament, GDP fell by -3.8 percent, while a year after the championship, it fell by -1.2%.

Effect and national pride

Is winning the world championship title really a reason for economic growth or is it a coincidence? During the 2014 World Cup, columnist Allen St. John in the American magazine "Forbes" wrote: "In the months after winning the title of the world championship, there seems to be a short-term increase in the rate of productivity. It can be imagined as a kind of 'national sugar rush' with a short-term energy effect, which then declines again.

Is the increase in GDP also the reason for the increase in domestic consumption, as a result of the celebration of success? There isn't much data on this, but ahead of the World Cup in 2022, the University of Surrey in England conducted a study which found that GDP growth relies mainly on export growth, not consumption growth internal or investment.

"Research confirms the thesis that success in one of the most prestigious and respected international sports competitions has the potential to influence the business cycle", says the author of the study, Marco Melo. Data on economic growth were compared with data from those countries that did not win the tournament.

Crisis in Argentina

An economic boom would be a real blessing for Argentinians. This country has been in deep economic crisis for years. Therefore, the successes on the sports grounds have, at least for a while, diverted attention from the problems in the country. Recession, inflation, devaluation of the local currency – about 40 percent of Argentines (a country of about 45 million people) live below the poverty line.

The crisis in Argentina is actually permanent in nature – and has practically lasted since the collapse of the financial system in 2001. Inflation is expected to reach 100 percent this year, while debts continue to rise. Given such serious problems in the country, it is difficult to expect a triumph in the Qatari desert to have any very significant effect on the national GDP.

The Argentine Football Federation (AFA), which will benefit from the boom in sales of sporting goods bearing the emblem of the new world champion, has reason to be happy. According to official data, the demand for Adidas jersey with the number ten of Lionel Messi has "exploded" worldwide.

By the way, Adidas is "absolutely satisfied" with the business in the framework of the World Cup 2022. The turnover related to the World Cup this year could go up to 400 million euros. Most of the turnover so far has been realized in the fourth quarter of this year./ DW


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