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Tuesday, January 31, 2023

Winning the World Cup, another guarantee of avoiding the Spanish recession?

If Spain beats Morocco in this Tuesday’s World Cup Round of 16 match at 4:00 pm, bars will jump with joy, Luis Enrique will appear as a meme in WhatsApp groups of friends, and even That at least patriots will be humming “Y Viva España” by Manolo Escobar. But, within the Ministry of Economy, Nadia Calvino, second vice president and minister of the branch, will have even more reasons to cheer. A study by the University of Surrey (United Kingdom) puts economic data to victory in the World Cup: the country that wins it can achieve an additional GDP growth of at least 0.25% in the two quarters after winning the trophy. A few tenths more than this, if it did happen, would surely put to rest fears of a recession in Spain for 2023.

Publishing researcher Marco Mello A kick to GDP: The impact on winning the World CupHe added that it is “technically possible” that a country experiencing a “slight recession” could avoid it by winning the FIFA World Cup.

In Spain, the Chamber of Commerce, the Economic and Social Council, BBVA Research and other economic analysis institutes have downplayed fears of a recession in recent weeks. Good employment data and positive developments in energy prices have eased expectations that GDP will decline for two consecutive quarters in what is considered a technical recession.

However, growth will be near zero, so it is possible that poor employment data or other damaging elements, such as a worsening of the war in Ukraine, will be a target for the Spanish economy in relaxation. Although, if there was a recession, it would have little impact on the economy, but Spain’s victory would surely allay those fears until 2023.

The researcher concluded that the engine of economic growth, more than consumption or capital accumulation, is an improvement in exports. Something to keep in mind in the case of Spain, as they accounted for 34.6% of GDP in 2021. The visibility that countries receive is essential for attracting interest in their products. According to FIFA data, the 2018 World Cup final between France and Croatia in Russia brought together 3.5 billion viewers, a spectacle that triggered the country’s brand, Mello says.

In particular, after winning the World Cup in Korea and Japan, Brazil increased its exports by almost 13% in the two quarters after winning the World Cup. The trend has been repeated in previous World Cups, although with more moderate data.

Economic data after two quarters of winning the World Cup

after two quarters of victory

  • France (1998), The French victory boosted their GDP in the two following quarters to win the World Cup by 0.38%; its exports 0.55% and its 0.79%; Private consumption grew by 1.49% and investment by 1.26%.
  • Brazil (2002). Brazil’s GDP grew by 0.35%; and exports 13.5%; However, imports declined by 0.44%.
  • Italia (2006). Italian economy grew 0.36%; exports 2.28%; imports, 1.47%; and consumption, 0.42% and investment, 0.95%.
  • Spain (2010), Spain’s GDP declines by 0.05%; Exports advanced 1.13%; Imports fell -0.20%; Consumption increased 0.42 / CG: 0.04 / FC: 0.95.
  • Germany (2014). The German economy grew by 0.26%; its exports, 1.32%; imports, 0.05%; consumption increased 0.45; And capital formation fell -1.5%.
  • France (2018). Its GDP increased by 0.26 on this occasion; exports grew by 1.32%; imports, 0.05%; Consumption fell 0.45%, and investment 1.5%.

data extracted from A kick to GDP: The impact on winning the World Cup

spanish exception

Spain was an exceptional case, as it did not benefit from World Cup funding. Although exports increased, the rest of the indicators, including GDP, decreased by -0.05% in 2010. At the time, Spain was in the midst of a storm sparked by the 2008 financial crisis, something that “blurred” the effects of the World Cup, Melo says. Another factor the investigation considers is the role of “favourites” for Spain in 2010: “Spain had recently won the Eurocup, these factors may also have influenced the deceleration in the growth rate.”

Qatar factor

High temperatures in the Arabian Peninsula in the summer led to the World Cup being moved to the winter season. However, Qatar, which paid 200,000 million euros to host the World Cup, has not been able to move the Christmas season off the calendar, according to US consultancy Front Office Sports. From the world of advertising, this fact is considered a “real challenge”, as Teresa de Ledesma, associate director of marketing at Kantar, told this newspaper.

The author believes that the fact that the 2022 World Cup winners will meet them during the winter is another factor that brings “uncertainty” to the economic results. Mallow’s research emphasizes that the results are determined by the visibility, influence and attraction enjoyed by the countries that win the star, which is compounded this year. Only 22% admitted that they are extremely or very interested in the tournament, According to research done by Kantar.

This type of study on the effect of sporting events on macroeconomic data raises doubts among economists. Antonio Pedraza of the General Council of Economists points out that, if there are significant increases, they will be transient. “A flash,” he says. Sports expert Juan Carlos Cubero believes that the correlation between sporting success and macroeconomic growth is “spurious” and recalls that “causation is not correlation.” However, development or not, Cubero knows what is the greatest good: “Having said that, the important thing is that we win the World Cup.”

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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