/ 10 July 2006

World Cup scores goal for German economy

A day after the World Cup ended, host nation Germany was not only counting the immediate economic benefits for businesses during the month-long mega-event, but also was hoping that the party mood will continue for the eurozone's biggest economy in the much longer term.

A day after the World Cup ended, host nation Germany was not only counting the immediate economic benefits for businesses during the month-long mega-event, but also was hoping that the party mood will continue for the eurozone’s biggest economy in the much longer term.

As praise was heaped on Germany not only for the precision-engineering of its organisation, but also the peaceful, laid-back hospitality with which the millions of foreign spectators were welcomed, politicians and business leaders hoped that the current feel-good sentiment would translate into higher consumer spending in a country not exactly known for its extravagant shopping habits.

Of course, ”there’s been no economic miracle in connection with the World Cup,” said Dirk Ulbricht of the Munich-based economic think tank Ifo.

Few observers had expected the sporting event to have more than a minimal impact on Germany’s gross domestic product (GDP).

However, ”the World Cup marks an enormous gain in Germany’s image”, Economy Minister Michael Glos wrote in a column in the Monday edition of the business daily Handelsblatt.

And that could prove particularly valuable at a time when the German economy, long in the doldrums, is already gradually getting back on its feet, with economists hoping that the recovery in private consumption, hitherto the main Achilles’ heel to a self-sustaining economic upturn, will continue to gather momentum.

The retail sector certainly appears to have benefitted from the championship, with preliminary figures suggesting that shopkeepers have seen additional revenues of €2-billion ($2,6-billion) during the four weeks of the World Cup.

Nevertheless, there are two sides to the coin and if sales of television sets, beer or flags have exploded, ”people who have bought a flat-screen TV or tickets to a match, are going to have scrimp and save elsewhere”, said Roland Doehrn of the Essen-based economic research institute RWI.

Sportswear maker Adidas may have sold 1,7-million football shirts bearing the German national team’s colours, but the clothing industry as a whole has seen sales dwindle, with football supporters showing no inclination to replenish the rest of their wardrobe, complained the industry federation BTE.

Two-thirds of the way into the competition, only 48% of hotels and restaurants said they were satisfied with business.

For the labour market, the World Cup has also been something of a success, creating around 50 000 jobs, said Glos.

But only half of those jobs will still be needed in a year’s time.

Nevertheless, foreigners’ perceptions of Germany appear to be changing and a new term ”Teamgeist” (team spirit), which was the name of the tournament’s official football, has taken its place alongside words such as ”Blitzkrieg” or ”Schadenfreude” in the ranks of internationally understood Germanisms, the Financial Times Deutschland suggested.

”And even if its difficult to put a economic figure on this change in image, the economy as a whole will certainly benefit from it,” said Glos.

Germany certainly stands to gain as a tourist destination, it seems.

According to a poll conducted by the DZT German tourist centre of foreign visitors during the tournament, 90% of those surveyed said they would recommend Germany as a holiday destination.

Around 2-million foreign tourists came to Germany during the month-long tournament, twice as many as anticipated. And those visitors spent an estimated €600-million.

In addition, Germans’ own support of their national team, the Mannschaft, which finished third in the tournament, has led ”Germans to gradually believe in themselves again,” said Markus Kurscheidt, an expert on sport economics at the university of Bochum.

And that will only help consumer morale, which has been looking up for months, even if the boost would have been the greatest had Germany actually won the World Cup, Kurscheidt said. – Sapa-AFP