The 2010 World Cup will add at least 0.5 percentage points to South Africa’s GDP growth, analysts at Bank of America Merrill Lynch said in a note on Monday.
But while the sporting event will boost retail sales and other consumption spending as well as tourism, it is likely to have a negative effect on industrial production, as the charts below illustrate:
As the BofAML analysts explained (emphasis ours):
The evidence from the previous five WCs suggests that retail sales and other consumption spending are likely to benefit from the Jun11-Jul11 event. Retail sales bounced massively in Germany and still notably in the US in the WC month, when compared to the six months before and afterwards (Chart 1). Japanese and Korean consumers were affected by the last global financial crisis in 2002, while French consumers spent more on services than retail goods.
Household consumption (differs from retail sales primarily by including services but excluding purchases by foreigners) accelerated in 2 out of the 6 last WC quarters (Chart 2).
tourism consistently benefits (Chart 3), while industrial production suffers (Chart 4), presumably because workers take leave or spend their time at work watching and discussing soccer. In this regard, US workers seemed to be an exception-be it due to a lack of interest or a lack of leave/lenience granted by their employers.
The analysts also argued that the World Cup “remains one of the under-researched topics in South African macro”. We agree- so please do let us know if you see any interesting research on the topic in the run-up to and aftermath of the tournament.
Related links:
Puma hunts sales in Africa ahead of World Cup – FT
All to play for in marketing South Africa’s World Cup – FT
Sceptics caught offside as goal nears – FT
