Saturday, April 21, 2007

2006 World Cup 'hardly touched' German economy

Experts say the 2006 FIFA World Cup had virtually no impact on growth and employment. According to a report released by Karl Brenke and Gert Wagner of the German Institute for Economic Research (DIW), expectations that the World Cup would significantly increase consumer spending were overly exaggerated. Although consumer spending increased in the second half of last year, this was due mainly to the increase of the value-added tax on goods and services from 16 to 19 percent, which took effect on 1 January 2006. "The World Cup's contribution to economic growth has been negligible. It was great fun. Nothing more, nothing less," said Wagner, the institute's research director of social risk management But separating out the economic effects of a mega sports events from other business trends is problematic, cautioned sports economist Markus Kurscheidt of the University of Bochum. "One has to be able to statistically filter other variables to determine the sole effect of the World Cup," he said.

"Only one thing remains clear: from 2002 to 2005, the infrastructure and promotion costs in hosting the big event boosted overall economic performance by barely 0.2 percent or at most 0.7 percent," wrote Oliver Samson for DW-World. "Not surprisingly, the main beneficiaries of the World Cup largesse was FIFA, the international soccer federation, and the German Soccer Association DFB, which cashed in 187 million euros (US$254 million) and 21 million euros respectively. The restaurant industry, where bars and outdoor cafes broadcast the live games, profited handsomely, although the sunny skies also boosted public viewing on huge projection screens."

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