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World Cup Scores Goal for German Economy

DW staff (als)July 11, 2006

Since the World Cup ended, host nation Germany has been counting the immediate economic benefits for businesses during the month-long event. It is also hoping the effects are long term.

Politicians and business leaders hope happy German soccer fans will spend more for a whileImage: picture-alliance/ dpa

Much praise has been heaped upon Germany for the precision engineering of its organization and the laid-back hospitality that welcomed millions of foreign spectators during the soccer extravaganza. Politicians and business leaders have been hoping that the feel-good sentiment would translate into higher consumer spending in a country not exactly known for its extravagant shopping habits. Still, many analysts warned against expecting any kind of 21st century Wirtschaftswunder.

"There's been no economic miracle in connection with the World Cup," said Dirk Ulbricht of the Munich-based economic think-tank ifo.

Few observers had expected the sporting event to have more than a minimal impact on Germany's gross domestic product (GDP).

"Can't keep the entire economy going"

Axel Weber, head of Germany's central bank, the Bundesbank, said on Tuesday that the current party mood in Germany in the wake of the World Cup will not be sufficient to give a lasting boost to the euro zone's biggest economy.

Oliver Kahn trinkt Bier
The Soccer and beer mix: Oliver Kahn, a German goalkeeper, enjoying the brewImage: AP

"A great World Cup by itself can't keep the entire economy going," Weber said in an interview published in the daily Die Welt. Besides, he said, "the current feel-good sentiment is a short-term phenomenon. It won't be long before we'll be talking about the same problems that we've been trying to solve for years," Weber said.

However, "the World Cup marks an enormous gain in Germany's image," Economy Minister Michael Glos wrote in a column in the Monday edition of the business daily Handelsblatt.

And that could prove particularly valuable at a time when the German economy, long in the doldrums, has been slowly finding its footing again. Economists hope that the slight uptick of consumer spending will continue to gather momentum.

T-shirts, flags and condoms were the hot items at the World Cup

WM Bilder des Tages, Fußball, WM 2006, Deutschland - Schweden, Deutsche Fans, 24.06.2006
Smiles, smiles, everyone!Image: AP

The retail sector certainly appears to have benefited from the soccer championship, with preliminary figures suggesting that shopkeepers saw additional revenues of two billion euros ($2.6 billion) during the month-long World Cup.

Nevertheless, there are two sides to the coin and if sales of television sets, beer or flags have exploded, "people who have bought a flat-screen TV or tickets to a match, are going to have scrimp and save elsewhere," said Roland Doehrn of the Essen-based economic research institute RWI.

Sportswear maker Adidas may have sold 1.7 million football shirts bearing the German national team's colors, but the clothing industry as a whole has seen sales dwindle, with football supporters showing no inclination to replenish the rest of their wardrobe, complained the industry federation BTE.

Two-thirds of the way into the competition, only 48 percent of hotels and restaurants said they were satisfied with business.

WM Bilder des Tages 09.06.2006 Schweden Fans
Swedish fans saved money by campingImage: AP

Transportation companies did well during the World Cup. According to German public broadcaster ARD, German Railways counted 15 million people who used the railways and trams. The airline Lufthansa calculated an increase of 200,000 passengers compared to last year.

Brothel operators, however, did not fare as well.

"The World Cup was a bust for brothel owners and prostitute dealers," Munich's Director of Police, Wilhelm Schmidbauer, told the ARD Web site, tagesschau.de. "The fans were more interested in hanging out at the Fan Miles and drinking beer than going to prostitutes," he said.

Fans were still frisky, though. Condom manufacturers enjoyed higher sales. André Schmincke, spokesman for Durex Condoms, told tagesschau.de that his company sold 30 percent more condoms during the World Cup than usual. "Apparently, people huddled closer during the soccer matches," he said.

For the labor market, the World Cup has also been something of a success, creating around 50,000 jobs, said economy minister Glos. But only half of those jobs will still be needed in a year's time.

Look good, feel good

Nevertheless, foreigners' perceptions of Germany appear to be changing and a new term "Teamgeist" (team spirit), which was the name of the tournament's official football, has taken its place alongside words such as "Blitzkrieg" or "Schadenfreude" in the ranks of internationally understood Germanisms, the Financial Times Deutschland suggested.

WM 2006 - Deutschland - Fan
People are saying Germans have a whole new lookImage: AP

"And even if it's difficult to put a economic figure on this change in image, the economy as a whole will certainly benefit from it," said minister Glos.

That could help in luring foreign investors. In an interview with tageschau.de, Eva Henkel of "Invest in Germany," a government-funded agency that promotes foreign investment in Germany, said: "It's clear that we've shown how wonderful and diverse Germany is."

Self-confidence is sexy

Germany stands to gain as a tourist destination. According to a poll conducted by the German tourism association DZT of foreign visitors during the tournament, 90 percent of those surveyed said they would recommend the country as a holiday destination.

Around two million foreign tourists came to Germany during the month-long tournament, twice as many as anticipated. And those visitors spent an estimated 600 million euros ($766 million).

In addition, Germans' own support of their national team, which finished third in the tournament, has led "Germans to gradually believe in themselves again," said Markus Kurscheidt, an expert on sport economics at the University of Bochum.

And that will only help consumer morale, which has been looking up for months, even if the boost would have been the greatest had Germany actually won the World Cup, Kurscheidt said.