World Cup will help SA recover from global economic crisis

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Article by: Esmarie Swanepoel

Published: 06 Aug 2009

World Cup will help SA recover from global economic crisis – economist

The 2010 FIFA World Cup was likely to contribute significantly to South Africa's recovery following the global economic downturn, which struck during the second half of 2008, an economist said on Wednesday.

Speaking at a panel briefing by accounting firm KPMG, Nedbank chief economist Nicky Weimar said that the World Cup would assist South Africa in growing its gross domestic product (GDP) to 1,6%.

Weimar noted that studies analysed by Nedbank had proven that countries hosting an international sporting event, which had strong local support, generally resulted in positive long-term returns. The opportunity to create tourism awareness would also benefit South Africa.

"I am encouraged about the fact that a lot is expected from us," the local organising committee's spokesperson, Rich Mkhondo said.

He noted that the construction projects and activities associated with the 2010 FIFA World Cup would assist South Africa in its economic recovery. Mkhondo stated that the sporting event had resulted in significant construction projects, with the refurbishments of roadways, stadiums and airports around the country.

The 145 000 direct jobs that have been created by the associated construction would also boost the economy. Mkhondo said that between 245 000 and 450 000 indirect jobs have been created as a result of the World Cup.

He further noted that these workers were likely to be absorbed into the national workforce once construction was completed, as skills transfer would make them an invaluable part of the economy.

The World Cup could also assist to drive tourism figures up to ten-million during 2010.

Economist in the Presidency, Alan Hirsch, noted the South African economy, which is in its first recession in 17 years, was likely to move into positive territory later this year. He said the economy could see gross domestic product (GDP) growth of 0,5% or 1%, compared with the first quarter of the year's negative growth of 6,4%.

"It is also possible that we will grow faster next year, but I think the important point from the government's perspective is that even if we do grow at 2,5% or 3% next year, it is going to take a long time for the condition of ordinary people to change."

Hirsch noted that the government was aiming to carry out all its current commitments so that it did not contribute to the downward spiral, but that it countered the economic downturn as much as possible. He added, however, that the government was more likely to act cautiously in future regarding investments and projects.