Spain’s World Cup victory could revive battered economy

Spain’s World Cup victory could revive battered economy

Spain’s World Cup victory could be just the tonic that the country’s battered tourism economy needs to return it to its glory days, according to the UNWTO.

“The victory is very positive for tourism,” said the executive director of the Madrid-based United Nations World Tourism Organisation (UNWTO), Marcio Favilla.

“The positive image is reinforced ... it is very important,” he added.

Cities such as Madrid and Barcelona that are home to Spain’s two biggest clubs, Barca and Real Madrid, should “capitalize as soon as possible” on this victory, he said.

“It is a a good time to reinforce the image (of Spain) on international markets,” he told the AFP.

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Tourism accounts for nearly 10 percent of Spain’s GDP. Spain is the world’s third most visited country, after France and the United States.

But Spain has been one of the hardest hit European Union countries during the downturn, especially its tourism sector. The country’s unemployment rate hit 20.05 percent in the first quarter, the highest level in the eurozone, and its highest reading since 1997 as the collapse of a property bubble continued to take its toll.

Finance and Economy Minister Elena Salgado said that winning the World Cup could only benefit Spain.

She said: “It generates confidence in our country, here and abroad, and that will also be good for GDP.”

Juan Carlos Martinez Lazaro, an economist at IE Business School, described the World Cup victory as “a free advertising campaign.”

The government currently predicts that the Spanish economy, Europe’s fifth largest, will contract by 0.3 percent in 2010.

But before the final against Holland, Industry Minister Miguel Sebastian said if Spain was victorious then the government would revise its gross domestic product forecast for this year upwards.

The rise in the number of people without work has fueled the expansion of Spain’s public deficit as spending on jobless benefits soared.

It stood at 11.2 percent of output last year, the highest level in the eurozone after Greece and Ireland.

One factor that could slow consumption is that the Spanish private debt is already at 178 percent of GDP, and that the high employment rate will curb any spending spree.