Followed in almost all parts of the globe and remembered by fans for decades, the FIFA World Cup is not an ordinary sporting event. According to FIFA estimates, 250 million people play football and there are more than 1.3 billion fans of the sport worldwide.
Given its popularity and universal fan-following and its economic impact, the FIFA World Cup is as much a sporting event as an economic event. For the hosting country particularly, the prestigious event is a measure of its sporting prowess and a rare opportunity to showcase its social and economic might. Successful execution of the Football World Cup also means arriving on the world stage as a country worth taking note of. With stakes so high, InstaReM, Asia-Pacific’s leading digital money transfer company, looks into the economics of the world’s biggest sporting extravaganza that is underway!
US$ 11 Billion Has Been Spent On The 2018 FIFA World Cup
The world’s most-followed sporting event is also one of the most expensive to execute. The Russian government estimates total spending on the 2018 FIFA World Cup at around US$ 11 billion (₽ 683 billion).
Out of this, US$ 4.22 bn (₽ 265 bn) has been spent on the construction of sports infrastructure, US$ 3.63 bn (₽ 228 bn) on the improvement of transportation facilities in and around the match venues across Russia and US$ 1.18 bn (₽ 74 bn) has been spent on support infrastructure. The other operating expenses are estimated at US$ 1.85 bn (₽ 116 bn).
12 Stadiums In 11 Russian Cities – At The Cost Of US$ 4.22 Billion
The spend on the sports infrastructure accounted for more than 38% of the total spend. A total of 12 stadiums – with a total seating capacity of 550,000 – in 11 Russian cities (Moscow, St. Petersburg, Sochi, Kazan, Saransk, Kaliningrad, Volgograd, Rostov-on-Don, Nizhny Novgorod, Yekaterinburg and Samara) have been built and renovated at the cost of US$ 4.22 bn (₽ 265 bn). As many as 96 training sites with a capacity of 16,000 children and youngsters have been developed all over the country for use beyond the World Cup tournament.
New Terminals At Airports, 178 km Of Road & More For US$ 1.9 Bn
Russia has spent heavily on its transportation and utility infrastructure. Spend on the Aviation infrastructure is estimated at US$ 1.9 bn (₽ 117.8 bn), which included 11 airports getting new terminals. Airports in Moscow is will be the major beneficiaries as improved aviation infrastructure will take care of increased passenger traffic, even after the event. Three new metro stations and 12 new roads and junctions have also been constructed. Twenty railway terminals and stations have been reconstructed/upgraded, and 178 km of roads have been constructed or improved. Apart from these, the work on the US$ 2 bn (₽ 124 bn)-Moscow Central Ring, a new railway line comprising 31 stations, has been completed ahead of the World Cup (planned separately – not part of the World Cup-related infrastructure).
US$ 1.18 Billion Spent To Construct & Renovate Housing And Medical Infrastructure
The hosting of the FIFA World Cup also involves building and upgrading the support infrastructure. As per reports, as many as 13 hospitals have been renovated or reconstructed. Similarly, 29 utility facilities and 12 power stations have been constructed or upgraded. As many as 27 new hotels have been constructed keeping in mind the spike in the tourist arrivals during – and beyond – as a result of the Football World Cup. Ten water supply and sewage systems projects have been constructed and upgraded, and 4 infrastructure sewage systems upgrade projects were implemented. More than 800 hectares of parks and green zones have been developed across multiple venues. Approx US$ 1.18 bn (₽ 74 bn) has been invested in construction and renovation of housing and medical infrastructure and power systems. These spends will have long-term utility and will continue to add to the Russian economy well beyond the World Cup.
Additional 570,000 International Tourists During June & July ’18
According to the Russian government’s forecast, the country will to host an additional 570,000 international fans during June and July 2018, over and above an average of 4.3 mn total international visitors to Russia during that same time period over the past four years. With nearly 700,000 Russians also expected to attend matches, the economic impact will be most visible for retailers/restaurants/hotels. Visiting fans are estimated to spend from US$ 5,000 to 8,000 on an average, contributing an additional US$ 2.5-4 bn to consumption. It is also estimated that the countries which host certain events enjoy an increased tourist flow of approximately 25%, the following year.
220,000 New Jobs & Increase In Personal Incomes By US$ 6.59 Bn
Apart from the positive contribution from retail sales increase, Russian economy may be positively affected by the creation of additional jobs. Annually around 220,000 jobs have been created and maintained during the preparation and hosting of the World Cup, which has led to increase in personal incomes by US$ 6.59 bn (₽ 414 bn). The service, transport and trade sectors traditionally see an increase in temporary employment in the World Cup year.
According to the Russian government data, 210,000 Russians acquired additional skills in preparation and hosting of large tournaments. Of these, 79,000 people upgraded their competency in the construction sector, 38,000 enhanced their skills in the hospitality industry, 18,000 people found new opportunities in transport and communication sectors, 18,000 upgraded their skills in utility, social and personal services, and 52,000 people received volunteer training. Around 5,000 people will be involved in Public Administration and Security-related functions.
FIFA World Cup’s Overall Impact On Russian Economy
While the World Cup is a widely anticipated international sporting and social event, it has emerged as a major commercial phenomenon. FIFA World Cup tournaments have accelerated economic development of the host regions in the past, and they continue to have a positive long-term impact. For Russia, the World Cup-related spends have been evenly distributed over 2013 to 2017, with average annual investments of around US$ 2 bn p.a. during this period, which corresponds to just around 1% of the total annual fixed investments and 0.2% of GDP. The Russian government estimates the combined impact of the World Cup on Russian GDP at US$ 13.80 bn (₽ 867 bn), which equals to about 1% of Russia’s GDP. The Russian government also estimates the boost for GDP to be between US$ 26 bn (₽ 1.62 tn) and US$ 30.8 bn (₽ 1.92 tn) over the 10-year period from 2013 through to 2023.
Massive investments in infrastructure often have far-reaching impact. The real contribution of the Football World Cup to the Russian economy may be much more significant than what’s currently visible and will be realized over the long-term. As the Russian government report puts it, the World Cup will leave a huge tangible and intangible legacy, which will benefit generations of Russians.
- InstaReM is a Singapore-headquartered cross-border payments company.
- Founded in 2014, InstaReM is licensed as a Money Services Business (MSB) in Singapore, Hong Kong, Australia, USA, Europe, Canada, India and Malaysia.
- InstaReM powers local payments to more than 55 countries and 3.2 billion people across the globe. InstaReM has created a unique payment mesh in Asia, which is being leveraged by financial institutions, SMEs and individuals to make fast low-cost cross-border payments.
- In March 2016, InstaReM successfully raised a US$5 million Series A round led by Vertex Ventures, with participation from Fullerton Financial Holdings and Global Founders Capital. In July 2017, InstaReM received another US$13 million investment Series B funding led by GSR Ventures, with par cipa on from SBI-FMO Emerging Asia Financial Sector Fund, Vertex Ventures, Fullerton Financial Holdings, and Global Founders Capital.
For more information please visit:
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg LONDON (Reuters) – The Bank of England might need to cut interest rates below...
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month...
Dollar extends decline as risk appetite favors equities
By Stephen Culp NEW YORK (Reuters) – The dollar lost ground on Friday, extending Thursday’s decline as improved risk appetite...
Bitcoin hits $1 trillion market cap, soars to another record high
By Gertrude Chavez-Dreyfuss and Tom Wilson NEW YORK/LONDON (Reuters) – Bitcoin touched a market capitalization of $1 trillion as it...
Shares rise as cyclical stocks provide support; yields climb
By Saqib Iqbal Ahmed NEW YORK (Reuters) – A gauge of global equity markets snapped a 3-day losing streak to...
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19...
Portable Oxygen Concentrators Market to Register 7.8% CAGR Through 2026; Sales to Surge as Oxygen Therapy Becomes Crucial in Covid-19 Treatments
Portable oxygen concentrator manufacturers are largely concerned with the maintenance of inventories throughout the coronavirus crisis, with optimization of supply...
Cancer Supportive Care Products Market to Reach US$ 32 Bn by 2030; Sales Limited by Complications for Cancer Patients Through Covid-19 Infections
The cancer supportive care products market is anticipated to reach a valuation of US$ 32 billion by 2030. The industry is expected...
Bronchoscopes Sales to Rise 1.5x Between 2018 and 2028; Potential Covid-19 Diagnostic Applications to Generate Lucrative Growth Opportunities
Bronchoscope manufacturers remain focused on development initiatives to improve product functionality and accuracy for higher adoption amid healthcare facilities. The bronchoscopes...
US$ 1.1 Bn Hypoparathyroidism Treatment Market Still in Infancy
Mushrooming incidences of thyroid cancer have amplified the number of thoracic surgeries, thus stimulating growth of hypoparathyroidism treatment market. Future...