Russia looks to score big with World Cup
Study indicates combined impact of event on country’s GDP will be $15 billion
PHOTO: AFP
MOSCOW:
Despite selling mugs and ornaments at Moscow's top souvenir market, Alexander does not expect a huge boost when hordes of flush fans descend on Russia this summer for the World Cup.
"You would think that the World Cup would be great for selling souvenirs, but not for us," said Alexander, a victim of pre-emptive anti-terror measures that will shut most of Izmailovsky and other outdoor markets.
His case begs the question what will be the economic impact of the World Cup really be for Russia?
An influx of hundreds of thousands of football fans will set cash registers ringing, but will it provide a lasting boost to Russia's lacklustre economy?
A study conducted by the McKinsey consultancy for the local organising committee estimated "the combined impact of the 2018 World Cup on the GDP of Russia will be around $15 billion, which exceeds the impact of similar championships in Brazil, South Africa, Germany and South Korea, and is second only to the result of Japan."
While that sounds big, it is mostly investment in stadiums and transport infrastructure, and when broken down over the six years that preparations have been underway, the impact is less than 0.2% of Russia's annual output.
Those investments didn't help Russia avoid a recession in 2015 and 2016 and overall growth is only expected to reach 1.5 to 2.0% in the coming years.
"The games will last just one month and the associated economic stimulus will pale in comparison to the size of Russia's $1.3 trillion economy," said Kristin Lindow, a Senior Vice President and analyst at Moody's rating agency. "We do not expect the World Cup to make a meaningful contribution to broader economic growth."
However the McKinsey study forecasts the economic impact from the games to increase by up to a third over the next five years, primarily due to a boost in tourism.
"Overall, in my opinion the World Cup will increase tourism to Moscow by 10 percent," Moscow Mayor Sergei Sobyanin said in a recent interview on RBK television.
Despite selling mugs and ornaments at Moscow's top souvenir market, Alexander does not expect a huge boost when hordes of flush fans descend on Russia this summer for the World Cup.
"You would think that the World Cup would be great for selling souvenirs, but not for us," said Alexander, a victim of pre-emptive anti-terror measures that will shut most of Izmailovsky and other outdoor markets.
His case begs the question what will be the economic impact of the World Cup really be for Russia?
An influx of hundreds of thousands of football fans will set cash registers ringing, but will it provide a lasting boost to Russia's lacklustre economy?
A study conducted by the McKinsey consultancy for the local organising committee estimated "the combined impact of the 2018 World Cup on the GDP of Russia will be around $15 billion, which exceeds the impact of similar championships in Brazil, South Africa, Germany and South Korea, and is second only to the result of Japan."
While that sounds big, it is mostly investment in stadiums and transport infrastructure, and when broken down over the six years that preparations have been underway, the impact is less than 0.2% of Russia's annual output.
Those investments didn't help Russia avoid a recession in 2015 and 2016 and overall growth is only expected to reach 1.5 to 2.0% in the coming years.
"The games will last just one month and the associated economic stimulus will pale in comparison to the size of Russia's $1.3 trillion economy," said Kristin Lindow, a Senior Vice President and analyst at Moody's rating agency. "We do not expect the World Cup to make a meaningful contribution to broader economic growth."
However the McKinsey study forecasts the economic impact from the games to increase by up to a third over the next five years, primarily due to a boost in tourism.
"Overall, in my opinion the World Cup will increase tourism to Moscow by 10 percent," Moscow Mayor Sergei Sobyanin said in a recent interview on RBK television.