Economists surveyed by Engineering News Online yesterday believe both risks and opportunities will arise due the fact that South Africa has been awarded the right to stage the coveted 2010 Soccer World Cup.

However, all tended to agree that the rewards would overshadow the potential downside risks.

The Standard Bank’s Goolam Ballim said that the World Cup will have a positive effect on the gross domestic product (GDP), but that, in the broader scheme of things, this impact would be modest.

He believes there will be a small rise will be seen in the preceeding two years on the back of infrastructure developments, with a stronger GDP rise in 2010 itself and the two years thereafter, as the tourism and hospitality industries experience spin-off business.

The construction industry is the sector likely to enjoy the most direct economic benefit, but Ballim speculates that companies such as Barloworld and Bidvest will also benefit.

However, Ballim saw the risks to the South African economy of hosting such an event as it could expose the country’s infrastructure weaknesses.

There could also be security risks in that the football fans are youthfull and passionate and local crime syndicates could target foreigners and cause South Africa some embarrassment.

Meanwhile, the South African Federation of Civil Engineering Contractors’ chief economist Henk Langenhoven said that the exact impact on South Africa’s GDP would be difficult to ascertain.

However, he identified the key area with GDP boosting potential as being in infrastructure development. He was particularly bullish about the prospects for the building and renovation of stadiums and the expansion of key airports. He also felt the World Cup would boost prospects for the the Gautrain project and road-infrastructure expansion.

Langenhoven saw a risk of hosting the World Cup as being that scarce resources might be diverted away from other crucial infrastructure projects such as harbours in favour of other projects such as airports and roads.

Merrill Lynch’s economist Nasmera Mulla also believes the impact on GDP will be positive, but said it was too early to provide exact figures.

Mulla said that South Africa’s fixed-investment sectors should benefit in the run up to the event and that the retail and leisure sectors should benefit in the year of the World Cup and for the two years thereafter.

The major risk to South Africa’s economy of hosting the World Cup is that we could overspend if projects and expansions are not properly planned.