The most recent World Cup in 2014 took place in Brazil. This happened in the summer before their presidential election. Generally, Brazil has been regarded as a footballing superpower throughout the years. In 2014, however, they failed to take advantage of the tournament being at home and lost to Germany. The Brazilian economy did appear to be relying on the tourism industry, and the tourists that Brazil did manage to attract provided $13.2 billion to the economy. The country had spent approximately the same amount in preparations, so ultimately there was little to no profit.
During the 2014 World Cup, a sector hoping to benefit on the potential profits was the employment industry. An impressive one million additional jobs were created during this period; however, in the long run the employment sector ended up suffering because of the event. A high percentage of Brazilians did not work and were treated to time off so that they could celebrate the sporting event. This led to businesses not earning profits and subsequently to less hiring and fewer working days.
This was not the first time the World Cup resulted in adverse effects upon the host country. In 2010 the World Cup was hosted by South Africa. While South Africa made significant public investments for the World Cup, they did not receive as many tourists as was expected.
The current World Cup is held in Russia, in 11 cities in the European part of the country. When pitching for the World Cup to be hosted by Russia, the bid team framed this as an opportunity for the country to continue to emerge from the collapse of the Soviet Union and to allow it to continue developing its infrastructure. The original proposal included an ambitious plan for the tournament to be hosted across 13 cities in 16 different stadiums. In addition to cities such as Samara having new stadiums built, Russia is attempting to use the World Cup for socioeconomic changes, with job creation as well as an increase in the installation of surveillance cameras.
Russia hosting the 2018 World Cup marks the third consecutive World Cup hosted by one of the BRICS countries. Heavy investment and development that the event requires appears to have an amplified effect on these BRICS countries as they are rapid-growth nations attempting to catch up to speed with infrastructure. Statistics indicate that Russia will be spending 600 billion roubles on the World Cup, with approximately 50 per cent allocated from the federal budget, 35 per cent from private investors and 15 per cent from various regions.
Since Russia was named as the host for the 2018 World Cup, Putin has aimed to showcase the country as a global superpower. It was intended to revive the stagnating sectors of the economy through the potential influx of foreign visitors and their inevitable spending. Construction companies are among the ones that will have reaped the benefits, although by now they would have already felt much of the impact. Gaidar Institute stated that the World Cup would cause a 0.2 per cent rise to annual GDP growth within the second and third quarters.
Contrastingly, many economists are stating that the month-long event will do little for Russia’s economy in the short term, whilst improvements to infrastructure and investment into tourism may carry the potential to bring in profits in the long term. The Central Bank in Russia which has consistently fought to bring inflation down from double-digit levels to post-Soviet lows, warned that the tournament may result in an overall increase in consumer prices.
Overall, due to the brief duration of the event and the vastness of Russia’s economy, it appears to be unanimously agreed that there will be limited economic impact from this World Cup. Despite the boost in tourism rates during this time, it is likely to be short-lived.