Russia World Cup’s Economic Effects Put at 21.5 B. Yen on Japan

June 26, 2018

Tokyo- Japan can enjoy economic effects of around 21.5 billion yen if it reaches the knockout stage at the ongoing FIFA World Cup in Russia, an analyst estimates.

Consumption in Japan will rise thanks to increased attendance at soccer matches and sales of related goods, according to Toshihiro Nagahama, chief economist at the Dai-ichi Life Research Institute.

He has analyzed the current situation of the Japanese national team by comparing the country's performance at the 2010 World Cup in South Africa, in which Japan advanced to the final 16.

"The similarity between the two events is that Japan is performing well despite low expectations before the event," Nagahama said.

He explained that the economic effects of the 2010 event were 21.5 billion yen, including a direct impact from the growth in attendance at Japan Professional Football League matches and sales of soccer-related goods, as well as the spillover effect, which includes spending on transportation, food and drink.

If Japan manages to make it to the knockout stage in Russia, similar economic effects will be generated, he said.

Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co., said that a jump in the benchmark Nikkei stock average the day after Japan beat Colombia in its Group H opener last week was a "World Cup effect."

"People's sentiment is important to the economic climate," he said.

"Sports that are popular can vitalize people and invigorate consumption and investment in related fields," he said.

Meanwhile, Hidenori Suezawa, analyst at SMBC Nikko Securities Inc., said that, as the World Cup is being held outside Japan, the Japanese economy will not benefit from inbound demand and that domestic consumption may be dampened since many people may watch the matches at home.

But all three analysts agree that the economic effects would be bigger if Japan accomplishes something greater than expected, such as making the final eight or better.

"If Japan wins the title, it will push up Japan's growth rate by one percentage point," Takumori said. Jiji Press