From the £1 billion-plus likely to be spent betting on the World Cup at williamhill.com, 888 Sport, Coral et al to the near £100 million expected to be spent with takeaways from Dominos Pizza, lots of businesses are ready to cash in on the events in Russia.
But, while the money will be flowing here, what about in Russia? Will hosting this tournament be an economic boost for the host country?
According to deputy prime minister Arkady Dvorkovich it already has had a ‘considerable economic effect’. He recently said: “The tournament has already boosted the economic development of the host regions and will continue to have a positive long-term economic impact.”
Dvorkovich’s comments came after a report from organisers which suggested that the total impact on the Russian economy could be between 1.62 trillion rubles ($26 billion) and 1.92 trillion rubles ($30.8 billion) when taking into account the decade from 2013 (when preparations began) through to 2023.
That figure supposedly takes into account everything from the spending on construction to the creation of 220,000 new jobs and the fact that Russians will be encouraged to exercise more and end up taking fewer sick days (!).
However, the report’s suggested price of putting on the World Cup – $11 billion – might well be an underestimate since it doesn’t cover the full cost of infrastructure spending or of erecting stadia which it says would have been built anyway.
Russia’s central bank has said that the spending so far has helped to return the economy to growth after a two-year downturn and the influx of tourists will surely do little harm, especially in some of the 11 host cities that don’t always attract such interest from those outside Russia.
Analysts at Russia’s Gaidar Institute estimated that this would amount to a 0.2 per cent jump in GDP in the second and third quarters of 2018.
However, the central bank did also warn that the tournament could cause an increase in inflation (only recently dragged down to post-Soviet lows), leading to increased costs for Russian consumers.
The regulator told Reuters: “A small, short-term increase in prices for some goods and services (food, entertainment, hotels) is possible, which will lead to profits for a few companies.”
The bank does still think it will be able to keep inflation below four per cent – but it’s worth considering that the economic impact of the World Cup won’t be positive for everyone involved. Hotels that have hiked prices up by as much as 5,000 per cent have already had a ticking off by the authorities with this in mind.
In a wider sense too, critics suggest that every host nation inflates the real economic impact of a tournament. FIFA does, after all, take a chunk of the profits and much of the inward investment is short term in its nature and doesn’t filter through to the local economy.
That’s not to say it’s not good for the economy, but that it’s definitely worth taking that $31 billion with a hearty pinch of salt. The feelgood factor (and propaganda value) of a World Cup is difficult to quantify, but is bound to help create a positive mood for the hosts, especially if their modest team can upset a few teams and go far in the tournament.
