LONDON: Although Russia will be hosting the FIFA World Cup, the biggest sporting event on the planet, this year, the country doesn’t stand to gain economic benefits that will help it in the long run, according to a report published by global financial firm Moody’s Investors Service on Thursday.
It further said that infrastructure spending ensured that much of the economic impact was already felt, even as it has been limited. Investments related to the tournament in the last 5 years have accounted for a mere 1%.
“The games will last just one month and the associated economic stimulus will pale in comparison to the size of Russia’s $1.3 trillion economy,” Kristin Lindow, a senior vice president and analyst at Moody’s, opined.
“We do not expect the World Cup to make a meaningful contribution to broader economic growth.”
Despite the claim, host cities have benefitted from the upgrading of transport and utility infrastructure.
For the Russian regions, new infrastructure will generate additional tax revenue and decrease future capital spending, with Mordovia Republic and Kaliningrad Oblast benefitting the most. On the other hand, World Cup spending has negatively impacted government finances in other regions, such as City of St. Petersburg , Samara Oblast and lead to a build-up in debt.
Russian food retailers, hotels, telecoms, and transport will see a boost in revenue, which will be too temporary to cause changes in business fundamentals or credit profiles. Moscow-based airports are among the key beneficiaries in the transport sector because upgraded facilities will support higher passenger flows, even after the event.
Construction companies are also among the key beneficiaries, but they would have already felt much of the impact.
