Germany's World Cup economic dream faded long ago

5th July 2006, Comments 0 comments

Germany's dream of winning the World Cup might have been shattered by Italy's victory in the semi-finals--but what about the economic dream? Andrew McCathie reports.

Germany's dream of reaching the World Cup finals might have been shattered on Tuesday - but for the country's businesses, the hopes of a major windfall had already vanished.

Business and consumer confidence might have soared as the championships got underway, with two million tourists - double the number expected - in Germany for the month-long championships, the world's biggest sporting event this year.

And Germany's reaching the semifinals might have allowed the country to reclaim its title as a world football superpower.

But economists have dramatically scaled back overblown growth expectations from the event.

"Unfortunately, we don't expect the World Cup to lead to an economic miracle," Dirk Ulbricht from the Munich-based Institute for Economic Research told Deutsche Presse-Agentur.

The most optimistic forecast now is for the tournament to top up German growth by a meagre 0.25 per cent.

The prospect of the championship having little lasting impact on Europe's biggest economy is likely to be particularly troubling for Chancellor Angela Merkel's government, which had hoped to ride the World Cup feelgood factor.

With Merkel's government planning hikes in both consumption tax and health insurance premiums, the World Cup was a key part of her so-called grand coalition plans for stimulating the national economy and for shoring up recovery from a protracted period of stagnation.

But it may be different in the long run. Instead of resulting in a rise in hard economic numbers, World Cup euphoria will live on and help boost Germany's global image long after everyone has gone home.

A survey of 1,300 visitors from around the world, conducted by Germany's tourist authority, found that 91 per cent felt welcome in the nation and would recommend it as a tourist destination.

But another survey highlighted that short term gains might be limited. The market research group TNS Infratest found that those running restaurants and hotels a little more divided about World Cup business benefits.

While 48 per cent said they were satisfied or very satisfied, 44 per cent said they were dissatisfied. When it came to restaurants, only nine per cent said they were satisfied.

Others, too, have found the World Cup a flop. Hopes of a boom had been high among hard-pressed retailers, but many found that fans' love of sport is not echoed in a love of shopping.

Despite the extended trading hours, many shops across the nation have been largely empty while the matches were being staged.

Figures show that almost everyone with a TV set turned in last Friday for the match between Germany and Argentina. The match scored a market share of 86.1 per cent.

Underscoring the problems faced by shop owners, retail sales slumped by an unexpected 2.2 per cent in May, during the build-up to the World Cup, just when it was predicted that many consumers would be splashing out on tournament paraphernalia and major purchases like new flat-screen televisions.

"Consumers either stayed at home or went to town to sit in front of giant screens in public squares," said Juergen Dax, the chief of Germany's Federal Association of Clothing Retailers.

For brewers, times have been good with the vast fan zones along with pubs, restaurants and bars packed to capacity during every match. Even before the World Cup began, the amount of beer consumed in Germany had jumped by eight per cent.

Flag manufacturers, too, have been surprise winners amid a new- found patriotism. One German department store reported a 900 to 1,000 per cent rise in sales.

Betting groups have in some cases seen business double. The huge TV audiences also meant pizza home delivery services have been battling to keep up with demand.

At the same time, the World Cup gave a new dimension to the global struggle between Germany's rival sportswear manufacturers - Puma and Adidas.

Germany might be out of the World Cup but the battle between the nation's sportswear brands is likely to continue, with the French semi-finalists in Adidas, and the Italian finalists in Puma.

Adidas, a World Cup sponsor, said sales had surged by 30 per cent to 1.2 billion euros during the championships compared to the same period last year.

The company has sold 15 million of the official World Cup "Team Spirit" football, compared to six million of its 2002 World Cup predecessor. "No doubt - Adidas is the big winner," said the sports goods maker's chief Herbert Hainer.

But Puma has already moved to open up a new frontline in the battle and is gearing up for the 2010 World Cup in South Africa. "We see Africa as a market with high growth potential," said Puma chief Jochen Zeitz.

5 July 2006

Copyright DPA with Expatica

Subject: German news, World Cup 2006, business in Germany

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