This sporty article by Bloomberg has caught my attention. Not that I like Spain wins the championship… I would love them to!
Bloomberg relates a potential consumption boost to winning the world championship…
The real winner after this weekend’s World Cup final may be the economy of the champion, as either Spain or the Netherlands will get a boost from victory in the world’s most-watched soccer match, economists say.
Triumph in the final at Johannesburg’s Soccer City on July 11 could add as much as 0.25 percentage point to annual economic growth for the winning team’s country from increased consumer spending, according to ABN Amro Bank NV economist Hein Schotsman in Amsterdam. For Spain, that could mean expansion this year instead of a projected contraction.
The all-European final is giving people something to cheer about in the middle of the sovereign-debt crisis that’s rocking the continent. Both the finalists could use it. The Dutch, still wrestling with the bailouts of the nation’s biggest financial- services companies, saw their government fall in February, while one in five Spaniards is out of work, the highest jobless rate in Europe.
“It would be good for the Dutch economy if the Netherlands wins,” ING Groep NV Chief Executive Officer Jan Hommen said. “Becoming world champion gives a good collective feeling, which leads to more consumer spending, that could have a positive impact on the economy of between 0.25 percent to 0.5 percent.”
Neither the Dutch nor the Spanish has won the quadrennial tournament before, and both already are benefiting from increased exposure internationally. Spain is making its first appearance in a World Cup final after beating three-time champion Germany in their semi-final on July 7. The Netherlands has been runner-up twice, the last time in 1978 against Argentina.
“We should be proud, such a small country!” coach Bert van Marwijk told Dutch television NOS after his team won their semi-final by beating Uruguay.
A World Cup victory may boost Dutch consumer spending this year by 700 million euros ($887 million), or 0.25 percent, said Charles Kalshoven, an economist at ING in Amsterdam. “The economic recovery still leans on restocking and exports, with domestic demand lagging, so increased consumer spending would be very welcome now,” Kalshoven said.
If the Dutch win, “every corner of the world will be reminded the Netherlands exists, where it is and that it’s home to 11 great players,” ABN’s Schotsman said. “It will help exporting companies, bringing the Netherlands as a place of business into the spotlight.”
Twice as Big
The Dutch economy, the fifth-largest in the euro area, is set to expand 1.25 percent this year, the government forecasts, while Spain, whose gross domestic product is twice as big, projects a 0.3 percent contraction. The European Union in May estimated Spanish GDP will fall 0.4 percent this year, while the Netherlands will see 1.3 percent growth.
Italy’s triumph over France in the 2006 World Cup led ABN Amro to raise its forecast for growth in the Italian economy that year by 0.2 percentage point to 1.7 percent, saying “happier consumers spend more.” In the end, GDP expanded 2 percent in 2006, a six-year high, according to EU data.
“One shouldn’t underestimate Europe,” European Central Bank President Jean-Claude Trichet told reporters yesterday in Frankfurt. “In soccer in particular, it’s quite impressive to see number of Europeans” in the final rounds of the tournament, adding that “I won’t suggest I have any preference” between Spain and the Netherlands.
“Dutch consumers, traditionally conservative spenders, will become euphoric if the country wins the World Cup, boosting economic growth as they step up spending,” said Schotsman. On the other hand, “Spain could prevent full-year economic contraction by winning,” said Schotsman, the author of an April report titled “Soccernomics 2010” that predicted a Spanish triumph this year.
For Spain, which emerged from an almost two-year recession in the first quarter, the benefits may not be as apparent. Unemployment near 20 percent, a surge in borrowing costs and the deepest budget cuts in three decades may undermine the recovery in the country.
“In terms of our international standing, it was very positive” for Spain to reach the final, said Javier Segura, chief economist at Caixa Catalunya in Barcelona. “But I’m not sure we can go as far as to say that this would have an impact on GDP.”
Spanish Industry Minister Miguel Sebastian said economists may raise their GDP forecasts for his country if its soccer team triumphs. Victory would improve Spain’s image internationally and boost the prospects for domestic spending, he said yesterday, according to Efe newswire.
Companies already are benefiting. Madrid-based broadcaster Gestevision Telecinco SA, which holds the Spanish rights to the main World Cup games, climbed 5.4 percent yesterday after Spain secured its place in the final.
Holland Screen Video, based in Roosendaal, the Netherlands, yesterday rented out the last of its 12 big screens for 21,000 euros. The 84-square-meter display is headed to Barcelona where as many as 40,000 fans will be able to watch the game on it. “The boom came after the semi-final against Uruguay,” said Holland Screen Director Marcel Jooren.
Amsterdam-based Heineken NV, the biggest Dutch brewer by volume, said yesterday that “the World Cup success and the beautiful weather in the Netherlands” are lifting beer sales.
Bavaria NV, the Netherlands’ second-largest brewer, won attention from a widely reported row with World Cup organizers over fans wearing orange dresses, which are distributed free with its beer, during the Netherlands’ game against Denmark on June 14. Orange is the official color of the Dutch team.
Sales at Ahold NV’s Albert Heijn supermarkets, the biggest Dutch chain, have been lifted by the World Cup as customers bought more ready-made meals and drinks, company spokeswoman Anoesjka Aspeslagh said. Dutch supermarket sales increased 2.8 percent in June from a year earlier, according to market researcher GfK Panel Services Benelux BV.
The winning team itself could boost spending, as Spanish players have been promised 600,000 euros each in bonuses if they win, according to newspaper Marca. The Dutch squad will get a bonus of about 300,000 euros per player, De Telegraaf reported on July 2.
Take care and see you next!
Antonio Rivela