A single thought runs through one's head upon arrival in South Korea: Football! The place is awash in props, promotions and enthusiasm surrounding Asia's first-ever World Cup soccer tournament.
You could easily go a day in co-host Japan without noticing a major sporting event's about to start, but not in this city -- or elsewhere in this nation of 47 million. Giant soccer-ball sculptures, billboards hanging over the skylines, huge banners draped over buildings, human-sized cutouts of players, you name it. Everyone and everything, it seems, has a piece of the event.
PHOTO: A P
It's not surprising, then, that analysts are wondering what the World Cup will mean for Korea's economy -- already one of the globe's most vibrant. It's already pumped additional life into the economy as stadiums and other infrastructure were built. And the 450,000 visitors expected here next month would boost consumption, and then some.
But what about the long run? Is there a connection between countries that host the World Cup and gross domestic product? Increasingly, yes, says Jim O'Neill, head of global economics at Goldman Sachs Group Inc. He argues that the "evidence is reasonably strong that the world economy and football are moving in the same direction." The biggest economies are getting better at the sport.
One of the more fascinating qualities of soccer is that many of the world's wealthiest nations aren't good at it. Within the Group of Seven industrialized nations, for example, neither the US nor Japan teams have much global influence within the sport.
At their last outing at the World Cup in France '98, Japan finished 31st out of 32 teams, scoring only one goal. The US came last. Within Europe, meanwhile, Switzerland is a relatively unsuccessful soccer nation in terms of its GDP.
Of course, some of the most prosperous nations in Europe -- France, Germany, Italy and England -- are also highly successful soccer countries. Yet the World Cup is an event where even the poorest nation in Sub-Saharan Africa can defeat one whose per capita income is 25 times higher. That phenomenon gives the event what O'Neill calls "intriguing aspects."
In his book Fever Pitch, British author Nick Hornby wrote that, thanks to soccer, "Yorkshire men, Lancastrians, Scots, the Irish, blacks, the rich, the poor, even Americans and Australians have something they can sit in pubs and bars and weep about." An elitist sport, it's not.
Yet O'Neill's research suggests it's the wealthier nations that are becoming more competitive. This year's finals, for example, will include six of the G-7 nations -- all but Canada. With India excluded, that means eight of the world's 10 biggest economies -- representing some 84 percent of global GDP -- will be competing.
O'Neill reckons that's a bigger proportion than ever before.
Moreover, analysts at Goldman Sachs expect the coming decade would see rapid growth in Brazil, China, India and Russia relative to G-7 nations. Among them, Goldman Sachs says, Brazil and Russia are "serious footballing countries." If the folks at Goldman Sachs are right, and the global economy evolves as much, then the correlation between football and GDP would increase.
In the short-term, analysts speak of connections between nations that win the World Cup finals and GDP and stock market performance. A coincidence, perhaps, but the French economy grew at its fastest rate of the 1990s in 1998 -- the year its team won. Analysts at HSBC Securities find that the stock markets of developed countries that have won the World Cup since 1966 have outperformed global indexes by 9 percent.
Of course, if didn't hurt that France, Germany and England won in years in which they were hosting. The construction of new stadiums and other preparations no doubt boosted each, if only temporarily. Still, the phenomenon intrigues economists around the world -- especially ones who are rabid football fans.
By that measure, bookmakers thinking Japan has a greater chance of winning the World Cup than Korea may be wrong. According to UK bookmakers William Hill, odds that Japan will win are 66 to 1. Though Korea's odds are far worse -- 150 to 1 -- its stock market is up 24 percent so far this year. Japan's is up just over 11 percent. Bottom line, if stocks are any guide, Korea may have a better World Cup than Japan.
The fact that the smart money is on Argentina flies in the face of the World Cup as an economic indicator. Still, investors may be putting dollars on them as 4-to-1 joint favorite to try to win back the billions lost on the devalued peso.
In fact, the World Cup may hurt Japan's economy more than help it. Economists' predictions for how much the event will boost GDP in the April-to-June quarter generally fall between 0.1 percent to 0.3 percent. That means GDP -- both in real and nominal terms -- will probably still be negative this year.
A World Cup boost already has come from public works projects related to the event, O'Neill says. Seven new stadiums were built at a cost of roughly US$1.6 billion, much of it financed with debt.
Many are sprawling multi-function sports complexes that cost far more than basic football arenas. After the World Cup, local authorities will find themselves heavily indebted and shackled with massive stadiums that may never be sold out again.
Here in Korea, meanwhile, officials seem to have their eyes on the long-term payoff: Branding. Sure, the 1 percent boost to GDP estimated by the state-run Korea Development Institute will help. But it's the opportunity to showcase the new, vibrant Korea that interests the government. This is, after all, the nation's biggest sporting event since the 1988 Summer Olympics.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS