Bruce Whitfield:
“Soccernomics”: you’ve got to love the term but it’s a real thing. Certainly part of the huge boost in confidence in South Africa since being awarded the 2010 World Cup.

Well the boffins at AMB Amro, the Dutch investment bank have been doing their sums about the economic impact at the 2006 World Cup, on the global economy. And it’s a real piece of research.

Nico Klene is an AMB Amro economist. Nico welcome, you’re on the line to us from Amsterdam this evening. This is not the first time you’ve done this Nico?

Nico Klene:
Well actually we started already in 2000 on the occasion of the European Championships, football, that time hosted by Netherlands and Belgium. And so this is already the fourth time that we’ve published a report.

Bruce Whitfield:
What impact then does the Soccer World Cup have on the global economy? It seems a big leap of faith to sort of say, you play a game of soccer and it actually has an economic impact.

Nico Klene:
Well it’s not that clear whether it has a huge impact, but we did some research and then we found out that there seems to be a relation between a country that’s winning the World Cup and comes from a [unclear] in that country.

And well assuming this relationship between winning the cup and more consumer confidence, we have made it’s report in order to conclude which country would be the best winner from an economic point of view.

Bruce Whitfield:
And your conclusion is that a victory by Italy in the 2006 World Cup would most benefit the global economy. How do you make that assumption?

Nico Klene:
Well, first of all we start from the assumption that there is a relation between winning the cup and consumer confidence. There are a lot of balances in the world economy.

Asia’s growing rapidly especially, the US has severe structural balances. Well, just to mention for an instance, it’s huge current account deficits so the growth in Europe would change this equilibrium, changes the imbalances in the world. Actually a European country should win the cup.

It should be a country which is not that small, so for instance our own country the Netherlands is too small to have an impact on the European economy. So it has to be a country which is somewhat bigger, for instance Germany, or France, or Italy, or the UK, or Spain. Well Spain and the UK are doing pretty well already.

So it should also be a country that needs a boost. France is not too bad as well, so two countries remain, both Germany and Italy, which are from a European point of view. There are other big countries, both in poor economic shape.

This is actually the world, this would be the best final of course from an economic point of view. And actually Italy is doing worse than Germany. It has severe economic problems and it would be the one country that deserves to win from this point of view, it is Italy.

Bruce Whitfield:
Certainly, a Germany and Italy final is the best in terms of the global economic impact of who wins the World Cup. But what about the impact and why we’re particularly interested in South Africa of course, is because we’re due to host the 2010 World Cup.

The economic impact on a country hosting the world Cup, we know that in South Africa we’ve got to invest in almost the infrastructure, there’s a bit of concern there that we may over invest for a once off event. What are the pros and cons there?

Nico Klene:
That’s not a point of [unclear] that’s the country that’s hosting the championships also they will receive a boost. As you’ve mentioned there are all kinds of infrastructure.

New stadiums, the renovations of existing stadiums will give a boost to economic growth and in addition the supporters that will come to see the matches, they spend their money in Germany and now in South Africa. Well it will also give a boost to the economy. Although, finances from the past tells that the effects are maybe substantial on a monthly basis, but on an annual basis these effects are not that big.

But it could be different when this championship is hosted by France like in 1998 or now in Germany or in South Africa, maybe it’s for a country like South Africa, more important for instance than for France or Germany which have bigger growth domestic products and so on.

Bruce Whitfield:
Nico Klene, I thank you so much indeed for talking to us this evening. On the line to us from Amsterdam, he is AMB Amro’s economist in Amsterdam and a fascinating study being done there.

That the victory in the World Cup will determine the growth in the global economy. If Italy wins, says AMB Amro, it’ll be a bigger boost than any other country winning in the 2006 World Cup and there of course you heard his views too on the potential impact for South Africa 2010.

I remember hosting the breakfast show the day before the announcement was made, of the 2010 World Cup and the tension was palpable. And ever since the announcement was made, yes there’s lots of other good stuff happening in the South African economy, certainly we’ve seen lower inflation, low interest rates, all of that contributes to this euphoria that we’re seeing.

But just the boost, the confidence that was put into the South African economy through us, winning that bid in 2010 certainly has not hurt one little bit.