UK finance professionals predict World Cup to boost Brazil GDP by just 4% in next 2 years

Finance professionals predict Brazil’s economy will grow by 4.1% over the next two years – compared to an average of 6.5% among past World Cup hosts

Central and South American hosts lead the way with average 9.8% GDP gains – making the 1970s a golden age for post-World Cup economic growth

 Current holders Spain the only nation whose victory coincided with a downturn

Olympics surpass the World Cup in terms of hosts’ subsequent GDP growth

1966 World Cup coincided with greater uplift for the UK economy than the 2012 Olympics

Finance professionals predict that this year’s FIFA World Cup in Brazil will boost the host nation’s economy by just 4.1% over the next two years, according to research by accountancy and finance recruiter Marks Sattin. This forecast leaves Brazil languishing outside the top ten in terms of the economic growth enjoyed by World Cup hosts since 1962, when comparable records began.

Marks Sattin’s research shows that World Cup host nations have seen an average GDP uplift of 6.5% in the two years following the event. Central and South American hosts have fared even better with tournaments in Argentina (1978), Mexico (1970 and 1986) and Chile (1962) preceding 9.8% GDP growth on average: more than twice the forecast for Brazil.

The fortunes of Mexico and Argentina made the 1970s a ‘golden age’ for post-World Cup economic growth that has yet to be bettered by subsequent hosts [see table below].

Source: World Bank. GDP data is in constant 2005 U.S. dollars for historic comparison.
*Forecast by accountancy and finance professionals

World Cup victories coincide with greater growth

Brazil is the bookmakers’ favourite to win the 2014 tournament and Marks Sattin’s research shows that past World Cup winners have fared marginally better than the hosts in economic terms: experiencing 6.6% GDP growth on average.

Current holders Spain are the only nation whose victory coincided with a downturn in its economy, while Brazil’s last four victories preceded an average of 10.7% growth.

Source: World Bank. GDP data is in constant 2005 U.S. dollars for historic comparison.

Olympic hosts outdo World Cup counterparts in economic stakes

Marks Sattin’s research suggests Brazil will see greater benefit from Rio’s hosting of the next Olympic Games in 2016 than they will do from this year’s World Cup. Countries hosting the Olympics have typically outperformed their World Cup counterparts and experienced an average of 9.6% GDP growth in the ensuing two years.

This figure is boosted by the exceptional performances of China (2008), Tokyo (1964) and South Korea (1988) – but even discounting these three Asian economies, Olympic hosts have enjoyed an average GDP growth of 6.8%: 0.3% higher than World Cup hosts.
However, the UK economy bucks the overall trend with the 1966 World Cup heralding greater GDP growth (6.4%) than the 2012 London Olympics (5.3%). 

Source: World Bank. GDP data is in constant 2005 U.S. dollars for historic comparison. Data for Moscow (1980) unavailable, London post-Olympic GDP based on the latest World Bank forecasts (April 2014).

Dave Way, Managing Director of Marks Sattin said,

“These findings suggest that hosting a major international tournament on the scale of the World Cup is invariably followed by a period of economic growth, heralding business expansion and new job opportunities.

“Accountancy and finance services are a core component of any international business, and the sheer scale of effort needed to capitalise on the worldwide exposure the event brings calls for a high level of technical and managerial skills.

“Brazil has experienced a rockier road than most in the lead-up to the World Cup, which is reflected in this cautious assessment of its growth potential. But with the Olympics on the horizon, it has the opportunity for even greater expansion from the one international sporting event that puts the World Cup in the shade.

“It’s interesting that UK economists have just as much reason as England football fans to hark back to the glory days of 1966. Brazil will be striving to relive the success of its revered 1970 team on the pitch, although few would bet on its chances of matching the economic uplift of 12.3% that Mexico enjoyed after hosting the event that year.”

Data Sources
*Survey among 264 accountants and finance professionals in May 2014
GDP data sourced from World Bank. Data is in constant 2005 U.S. dollars. Dollar figures for GDP are converted from domestic currencies using 2000 official exchange rates.