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Tue, May 21, 2002 - Page 19 News List

Japanese economy may not get much kick from World Cup

BLOOMBERG , TOKYO

A toddler follows her mother in front of a flower bed formed like a soccer ball at Sakuragicho railway station in Yokohama on Sunday.

PHOTO: AP

Masako Harada canceled her annual vacation and pooled her savings with her bonus to spend more than US$2,500 on tickets for the 2002 World Cup soccer finals.

She didn't stop there. Even though she doesn't like burgers, she ate every day at McDonald's for a month to win tickets in a contest.

She plans to shell out Japanese yen 20,000 (US$155) for a satellite dish to watch the games live on Sky PerfectTV.

"I'll spend whatever it takes to fulfill the World Cup experience," said Harada, 33, a telephone systems engineer.

Japan is counting on these fans, plus almost a half-million foreign visitors, to help the world's second-biggest economy rebound from 12 years of decline that left it with a lower credit rating than first-round opponent Belgium. Economists are skeptical it will get much of a kick.

"There are deeper problems in the Japanese economy for it to simply be pulled out of recession by this event," said Eiji Kitada, an economist at Hamagin Research in Yokohama, where the final game will be played June 30. Among them: a five-year decline in bank lending, 2 1/2 years of falling prices and a jobless rate stuck near a record high.

In addition, the first World Cup held in Asia is also the first hosted by two countries. Japan, which built seven new stadiums for the May 31 to June 30 tournament, will reap only half the benefits of being a host because it will split the 64 games with South Korea.

An increase in spending by fans, officials and the media may come at the expense of reduced spending on movies, the theatre and other forms of entertainment as people stay at home to watch games on TV, economists said.

World Cup spending will add just 0.3 percentage point to gross domestic product in the three months ending June 30, said Shinichiro Kawasaki, a senior economist at Dai-Ichi Life Research Institute.

That may not be enough to avoid the economy shrinking further -- gross domestic product will shrink 0.2 percent this quarter, according to the latest Bloomberg News survey.

In Yokohama, 45 minutes by train from downtown Tokyo, local merchants share the pessimism of economists.

Take Hiroko Tominaga, who runs a bakery next door to Kozukue Station, the closest train station to the 72,370-seat Yokohama International Stadium. She doesn't plan anything special to commemorate the games, such as soccer ball-shaped cakes.

"It just wouldn't be worth it to do something special," she said. "It will be like any other business day."

Others are more confident. Sky Perfect Communications Inc, Japan's biggest pay-television operator, the only Japanese broadcaster showing all 64 matches live, aims to sign up 360,000 new customers by the end of the tournament, spokeswoman Naoko Ohya said.

Adidas-Salomon AG, the official supplier of this year's tournament balls, forecasts sales will rise 30 percent in Japan this year, helping it meet its goal of overtaking Nike Inc as the largest seller of branded sporting goods in Japan.

Companies that stand to gain the most are the official sponsors and suppliers with licenses to market World Cup goods.

It isn't just World Cup shorts, badges, hats and flags. Stores are also are selling bottles of World Cup sake, raincoats that look like a soccer ball when they are rolled up, tableware and binoculars.

They have incentive for pushing sales: companies had to pay billions of yen in licensing rights to FIFA, world soccer's governing body.

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