'World Cup won't save economy'

Johannesburg - The economic impact of the World Cup soccer tournament next year could be considerably smaller than people expect.

"They are just a bunch of soccer supporters," says Jeff Gable, head of Absa Capital's research division.

"Although 64 soccer tournaments will be good for the country's reputation, the economy is much bigger than this. What's more, the effect of the tournament will be measured in two different quarters."

The tournament begins on June 11, that is to say in the second quarter, and ends in the third quarter on July 11.

"I imagine the tournament will generate less than $1bn from soccer tourism," Gable declares.

"Most of this will be in the first two weeks during the group matches. Most people will go home once their teams are out of the tournament."

Research by Grant Thornton indicates that the tournament will contribute about R55.7bn to the South African economy. The estimated 483 257 tourists will spend R8.5bn-odd here, according to Grant Thornton.

At the current exchange rate of R7.40/dollar, Gable's estimate of under $1bn is more than R1bn less.

Gable adds that South Africa is not necessarily a cheap tourist destination.

"You have to reckon that World Cup tourists will spend considerably more than ordinary tourists would if you expect to see a massive economic impact."

As far as the inflationary effect of additional spending during the World Cup is concerned, Gable reckons hotels and restaurants run the highest risk.

"The average price of a hotel room in the last two weeks of June next year will be significantly higher than the normal price for that time of year."

- Sake24.com

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