FIFA World Cup Africa fever

It is finally time. Today, South Africa will be pushed into the global spotlight as Africa's first host of one of the world's biggest sporting events.The World Cup will provide an opportunity to showcase South Africa, and Africa, as never before.

The consensus estimate is that the World Cup will add 0.3-0.5ppt to South African GDP growth in 2010. The hope is that the tournament will also help to dispel long-held misperceptions about the region, leading to increased trade, investment and future prosperity. As the World Cup slogan suggests, 'Ke Nako' - It is time. Africa's time.

The immediate impact is difficult to quantify
Estimating the economic impact of a large sporting event is hard, as such studies have historically had a significant upward bias. They are almost always more optimistic before the event than the impact measured afterwards. The academic literature on the subject shows that very few globally important sporting events have had any statistically significant impact on regional income or employment - in some instances, the effect has even been negative. For markets, the slump that is expected to follow a major sporting tournament is almost written in stone, whatever the immediate triggers (think Beijing after the 2008 Olympics, or Athens 2004). The question is, will South Africa be different? The national government has already spent an estimated R 30bn on the tournament, with an additional R 9bn spent by cities and provinces - a total sum which far exceeds the amounts envisaged at the time of South Africa's World Cup bid. At 1.6 percent of GDP, this spending may be less than the fiscal stimulus seen elsewhere, but for South Africa, the timing was crucial.  Much of the investment (primarily in stadia and transport infrastructure) took place after the global crisis and the slowdown in South Africa's economy preventing what may otherwise have been a more severe slowdown. The timing of public investment in infrastructure (and its role in providing a counter-cyclical boost) was key, suggesting that its importance went beyond its rather modest share of GDP.

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