The Economic Effects of Hosting The 2022 FIFA World Cup in Qatar

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Winning the World Cup is the ultimate goal of any footballer or footballing nation. Legends of the game such as Pele, Maradona and Zidane have etched their names in history by winning the prestigious tournament. The best 32 teams from the six continental regions of Africa, Asia, Europe, North and Central America, the Caribbean, Oceania, and South America compete in this event, which takes place every four years. This event usually takes place in the summer, however due to the extreme heat in Qatar in the summer, the competition will start on November 21 and end on December 18, 2022. While winning a World Cup indubitably brings its own share of wealth and media attention, does the same apply to hosting the tournament?

Hosting a World Cup requires significant economic expansion and increase in spending. There are minimum requirements in terms of facilities and capacity that the host needs to comply with. Qatar has well and truly stepped up its efforts to meet these requirements by setting up the infrastructure to support an anticipated 1.2 million visitors during the winter event, which equates to almost half of the nation’s present population. The country has built state-of-the-art stadiums that have never been attempted in the history of the sport, expanded its airport, established a modern metro system and even constructed new districts in the capital city. They have spent roughly 200 billion USD on these projects. Will these investments bear returns?

In a 2010 presentation (here), FIFA outlined the economic effects of the World Cup in Germany in the past and also laid out their forward-looking approach to managing economic opportunities around South Africa’s hosting of the tournament. While these numbers and data are grossly outdated, they provide interesting insights into how the 2022 World Cup will impact some industries or have already impacted them. Germany had an overall financial impact of 2.86 billion Euros; the direct tax income generated in Germany was approximately 104 million Euros; 50,000 additional jobs were created in the 8 months preceding and following the World Cup; and the German GDP was boosted by 0.3% thanks to the tournament.

Qatar has the world’s third-largest natural gas reserves. They are also one of the major oil producers. These sources of revenue are extremely volatile and unsustainable in the long term. Thus, the country has ambitions of growing its non-energy economy and become a regional business and tourism hub. Qatar hopes the World Cup will precipitate a strong rebound in Foreign Direct Investment (FDI), that plummeted to –2.8 billion USD in 2019 as a result of blockades imposed on them in 2017. New laws have been put in place to facilitate foreign investment in the country by owning 100 percent capital in all sectors and Qatar are expected to become an investment hub in the post World Cup years. Qatar also expects to create 1.5 million new jobs in construction, real estate and hospitality in order to host the event.

With a footfall of 1.2 million fans, the World Cup will accelerate growth in various sectors such as travel and tourism, infrastructure and hospitality. Qatar’s organizing committee expects to generate 240 billion USD by 2025 in revenue. The event will also help the nation fulfil its National Vision of 2030. Qatar’s soft power and political influence would also presumably grow in the aftermath of the tournament as it could act as an opportunity to build bridges between the Western and Arab worlds.

But it’s unclear if these adjustments will lead to long-term economic growth. Higher levels of tourism and lower unemployment rates may not necessarily continue in the years after the competition. If the new infrastructure is not frequently used, the building and upkeep of the venues for the games might not produce long-term economic benefits either. Although Qatar argues that much of the money spent on infrastructure enhancements for these games would have been spent regardless of hosting them, the long-term impacts of this infrastructure are still unknown. Even with the economic benefits of tourism, a sharp increase in tourism for this tournament could cause higher rates of inflation in the future. With more individuals present in Qatar due to the World Cup, there will be greater demands for goods, causing an increase in price levels.

The opportunity to host the largest stage in football is exciting for Qatar as the event draws closer. Even if the games’ immediate economic effects appear to be favorable, it is still unclear whether they will lead to long-term economic development in this Middle Eastern country. The ripple effects of economic opportunities in other neighboring countries like UAE and KSA and the increasing efforts to facilitate free flow of thousands of football fans crossing borders to boost tourism and consumer revenue are definitely on the cards!

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