1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

Forget the Title -- Germany Wants an Economic Boom

Johannes Beck (jdk)May 21, 2006

Germany's influential DIW economic research institute released a forecast that the World Cup would not significantly aid the country's economy. Yet Portugal's experience in 2004 was slightly different.

Soccer fans shouldn't just spend good cheerImage: dpa

Over a million soccer-crazy supporters are supposed to give Germany's domestic economy a significant boost during this summer's World Cup. At least, that has been the quiet hope of politicians and the tourism sector. The world's largest sporting event should not be a one-off occurrence for visitors.

"We have a huge opportunity to show Germany is not just a soccer country but a tourist destination," Klaus Laepple, president of the German tourism industry association, said in March.

This week, though, the German economic research institute DIW released a report that said the upcoming World Cup soccer championships will have a negligible impact on the domestic economy, which has been suffering by weak demand at home for years. The think tank's report was sober in its analysis, having burst the dreams about long-term economic benefits.

"But that (an economic recovery) will only happen if the World Cup leads to a sharp change in consumption and investment behavior. And that is not to be expected in this case," the DIW found.

Euro 2004: Recession's blow softened

Neue Präsidentensuite im Hotel Adlon
The hotel industry hopes the presidential suites are booked longerImage: picture-alliance/ dpa/dpaweb

The organizers of the Euro 2004 in Portugal also saw the soccer event as an economic opportunity. Around the country, ten new stadiums were erected at a total cost of 650 million euros. Seemingly a large sum, but to put it into perspective, the Stade de France in Paris, built for the 1998 World Cup, cost more than that alone.

The federal government and the country's large clubs from Lisbon and Porto footed two-thirds of the bill. The municipalities had to come up with the rest, a large burden that is still on the backs of the cities Loule and Faro, who have no first division soccer teams to fill up the venues.

Nevertheless, the benefits of the European Championships were felt. In 2003, the economy had shrunk 1.1 percent. In 2004, it could expand by 1.2 percent.

"It was very important. At the time, Portugal was in a recession and Euro 2004 helped soften the blow by creating over 40,000 jobs," said economics professor Victor Martins from Lisbon University, who was asked to compile a report for the government.

The tourist industry suffered

Bildergalerie Stadien in Portugal: FC Porto
FC Porto got a new soccer stadium for the EURO 2004Image: AP

What seemingly should have profited most from a large sporting event like the European Championships was the hotel branch. But counter-intuitively, room occupancy rates fell in 2004, but regionally, the differences were great. The north, Porto and Lisbon could book increases; the vacation paradise, the Algarve, dropped off so badly that it skewed the statistic. Apparently, the potential chaos of the tournament scared off the usual clientele.

Importantly though, vacationers did not just pack up their bags and fly straight home after the final match.

"We produced our largest advertising campaign ever," said Antonio Padeira, director of Portugal's national tourism institute, ITP. "The slogan was: The post-match time is the best part of the match. Our ads showed a modern Portugal with numerous holiday destinations. They put tourism at the center. Soccer hardly appeared. Just enough so that the ads could be connected with the championships."

The strategy worked. On average, they stayed a half week longer. That just may be the modest goal German hoteliers want to achieve after the World Cup 2006.