The economics of the World Cup

Spain, Portugal and Greece could all do with a good World Cup run. Economists reckon that the further a team progresses in the tournament, the greater the boost to its national economy. For all the hype, however, any benefit outside host South Africa will be short-lived. Some of the golden ball's shine may rub off on the victors. But, with 32 teams competing, there will be many more losers.

ING economist Charles Kalshoven says that the further the Dutch team advances, the better it will be for the Netherlands economy, because retailers and restaurants will earn a better return on investments they have made to capture the benefits of the tournament. Improved consumer confidence will also lead to higher spending.

This effect could provide a welcome respite for the battered Spanish, Portuguese and Greek economies. Other governments struggling to impose tough austerity plans will no doubt be relieved by some temporary national jubilation if their teams do well.

But the effect works both ways. For those teams that have to take an early flight home, disappointment on the pitch is likely to be reflected in the national mood, both on the high street and in the work place.

Besides, even soccer success doesn't guarantee a sustained lift. Spain's historic victory in Euro 2008 may have given the country a short-term boost, but did nothing for the economy in the longer run. Unemployment has doubled from just below 10 percent to around 20 percent since Spanish captain Iker Casillas lifted the Henri Delaunay trophy.

Greece has fared no better since it defied the odds to win the European championship four years earlier.

Expectations may be riding high, but soccer's superstars won't succeed where governments and central banks have failed. Miracles on the pitch are more likely than financial ones.

- moneyweb.co.za