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Germany's World Cup triumph fails to net economic rewards Germany's World Cup triumph fails to net economic rewards
(about 3 hours later)
As Germany's captain Philip Lahm lifted the World Cup trophy up to the heavens inside the Maracanã stadium on 13 July, many at home hoped the sporting triumph would also boost the national economy. But a month on, analysts say the much-talked about "World Cup effect" has been exposed as a myth. On Thursday, Germany's shock 0.2% contraction in GDP sealed the gloom,flattening in the process the eurozone's first-quarter GDP growth. As Germany's captain Philip Lahm lifted the World Cup trophy up to the heavens inside the Maracanã stadium on 13 July, many at home hoped the sporting triumph would also boost the national economy. But a month on, analysts say the much-talked about "World Cup effect" has been exposed as a myth. On Thursday, Germany's shock 0.2% contraction in GDP sealed the gloom, flattening in the process the eurozone's first-quarter GDP growth.
"Germany winning the World Cup may have improved the general mood in the country in the short term, but it hasn't had any noteworthy impact on consumer confidence," Rolf Gürtl of market analysts GfK said."Germany winning the World Cup may have improved the general mood in the country in the short term, but it hasn't had any noteworthy impact on consumer confidence," Rolf Gürtl of market analysts GfK said.
According to other analysts, the deterioration in German-Russian business has dampened optimism among businesses and consumers. On Tuesday, Mannheim's Centre for European Economic Research (ZEW) economic sentiment index registered a 12-point drop for August, the biggest since June 2012. "The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now," the centre said. According to other analysts, the deterioration in German-Russian business has dampened optimism among businesses and consumers.
On Tuesday, Mannheim's Centre for European Economic Research (ZEW) economic sentiment index registered a 12-point drop for August, the biggest since June 2012. "The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now," the centre said.
Another reason for the footballing triumph's limited economic knock-on effect is that German consumer confidence may have already peaked before the tournament. In July, GfK reported that German optimism about rising wages had reached its highest level since reunification.Another reason for the footballing triumph's limited economic knock-on effect is that German consumer confidence may have already peaked before the tournament. In July, GfK reported that German optimism about rising wages had reached its highest level since reunification.
Adidas's case illustrates the wider trend: from a sporting perspective, the sportswear giant had a "dream tournament", according to a spokesman Lars Mangels, backing the tournament's winning team, the runners-up, the top scorer, the best goalkeeper and the best player all wearing the trademark stripes.Adidas's case illustrates the wider trend: from a sporting perspective, the sportswear giant had a "dream tournament", according to a spokesman Lars Mangels, backing the tournament's winning team, the runners-up, the top scorer, the best goalkeeper and the best player all wearing the trademark stripes.
After the final, the Bavarian manufacturer announced its football division was expecting to make a record turnover of €2bn (£1.6bn) this year, having already sold more than 2m Germany shirts, 30% more than its its previous record year, in 2006. The day after the final, the value of Adidas shares rose by 2.7% After the final, the Bavarian manufacturer announced its football division was expecting to make a record turnover of €2bn (£1.6bn) this year, having already sold more than 2m Germany shirts, 30% more than 2006, its previous record year. The day after the final, the value of Adidas shares rose by 2.7%
Nonetheless Adidas shares dropped by 10% when the company issued a profit warning at the start of August, blaming poor performance in its golf business and the volatile Russian market. "In the end, even winning the World Cup couldn't fend off problems in other parts of the business," said Mangels.Nonetheless Adidas shares dropped by 10% when the company issued a profit warning at the start of August, blaming poor performance in its golf business and the volatile Russian market. "In the end, even winning the World Cup couldn't fend off problems in other parts of the business," said Mangels.
Other sectors that usually profit from national euphoria around sporting events too have been hesitant to put increased profits down to the "World Cup effect".Other sectors that usually profit from national euphoria around sporting events too have been hesitant to put increased profits down to the "World Cup effect".
Germany's Electrical and Electronic Manufacturer's Association said it had registered an increase in the sale of TV sets in May, but said it was "cautious" about whether not Germans were buying them for the big tournament. Germany's Electrical and Electronic Manufacturer's Association said it had registered an increase in the sale of TV sets in May, but said it was not clear whether Germans were buying them for the big tournament.
Germany's brewers registered its best beer-sales in four years for June. "But a hot summer is much more likely to make the difference than a successful World Cup", said Deutscher Brauer-Bund spokesman Marc-Oliver Huhnholz. Germany's brewers registered their best beer sales in four years for June. "But a hot summer is much more likely to make the difference than a successful World Cup", said Deutscher Brauer-Bund spokesman Marc-Oliver Huhnholz.