World Cup kicks up German economy

Mumbai: The soccer World Cup probably gave the German economy a short-term boost and the positive image the country projected during the tournament may have longer-lasting effects as well, economists say.

German sports goods firms Adidas and Puma, which sponsored World Cup winners Italy, have enjoyed surging sales of replica shirts thanks to the tournament, which also saw beer sales soar and service sector firms cash in.

Retail sales would probably get a € 2.0 billion ($2.54 billion) boost from the World Cup, which ended on Sunday, the head of the HDE retailers' association said on Thursday.

Economy Minister Michael Glos said this week he expected the World Cup to boost the economy, and many analysts agree.

Douglas McWilliams, Chief Executive of the Centre for Economics and Business Research in London, said the tournament could lift 2006 German GDP by 0.3-0.4 per cent.

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"That's perhaps in a sense the tip of the iceberg," he said.

"We think there has been quite a positive rebranding effect, which goes a lot further than just simply the impact on GDP, and suspect that that will probably be quite good for international investment in Germany," McWilliams said.

A party atmosphere swept across Germany as Juergen Klinsmann's young team made a bold run for the title before losing to Italy in their semi-final.

The upbeat mood during the tournament helped Germany shake off its reserved image and left a glowing impression on many of the 1.5 million fans who travelled to see the World Cup."What Germans have shown is that they know how to party," said ABN Amro economist, Charles Kalshoven.

In a report entitled "Soccernomics 2006", he said the World Cup could create a "permanent tourism dividend for the future". Stefanie Heckel, a spokeswoman for Germany's DEHOGA hotel and catering association, agreed.

"We are very confident we will continue to feel the benefits from the World Cup in the mid to long term," she said.

"In one study, 90 per cent of foreign guests said they would recommend Germany to others as a holiday destination, which is great.

"She added that the industry hoped to have booked a boost of EUR 500 million by the end of 2006 thanks to the World Cup.Germany has depended heavily on strong exports to drive growth in recent years, but with many analysts forecasting a slowdown in global economic activity next year, Europe's largest economy may soon have to rely more on domestic demand. The tourist industry could offer key support here.

Kalshoven said Germany could enjoy more of a boost from tourism than the French did when they hosted, and won, the World Cup in 1998 as France was already a popular tourist destination."I think Germany has a lot to offer," he said. "There has to be a big chunk of people who weren't aware of that before."