The Euro 2012 football championships may have been a damp squid for the co-host in sporting terms, but in a new report Poland claims that the event will boost productivity, and therefore GDP. The country's experience, it says, deserves to be held up as a new benchmark for the long-term economic impact of hosting international sporting events.
The tournament, which was co-hosted with Ukraine in the summer, catalysed a massive shake-up of Poland's ramshackle infrastructure, and transformed its image on the global stage, providing potential for long-term gains, according to PL.2012, the official tournament organizer. That outlook presumably assumes that the host of construction giants struggling in the wake of the infrastructure build out will get their finances back on track in the near term.
"We think the 'Poland Effect' is something more than the 'Barcelona Effect'," said Marcin Herra, boss of PL.2012, referring to economist jargon for the long-term positive economic effect of hosting a major sporting event, in reference to the 1992 Olympics, reports AFP. "Barcelona was essentially about boosting tourism, but in Poland it's been about the economy overall, the infrastructure, and know-how."
Initial reports from the event suggested Poland would struggle to pick up the benefits it hoped, suggesting the number of visitors was lagging. The report verifies that, showing that only 677,000 turned up, rather than the 821,000 expected, largely because of the Eurozone crisis. However, those who did show up ended up spending PLN1.1bn (€268m), compared with the PLN845m forecast.
The report says it hopes Poland will reap further tourist benefits as time goes on. According to the London-based Brand Finance Institute, Euro 2012 helped lift Poland up its 100-nation ranking, from 24th to 20th. In financial terms, the value of the brand "Poland" jumped 75%. "The impact on our image is going to be long-term," boasted Sport and Tourism minister Joanna Mucha.
Overall, PL.2012 says that the economy is likely to see a cumulative boost of PLN21bn until 2020, or a 1.3% increase in GDP. A full three-quarters of that impact, however, stems from the new roads and other infrastructure improvements built to serve the visitors, rather than the tourists themselves.
"I think the long-term impact of Euro 2012 is the most important part of the success story," said Jakub Borowski, lead author for a 2010 survey on Euro 2012's potential impact, now freshly updated.
Ahead of hosting the tournament, Poland was forced to finally accelerate its sluggish progress on its notoriously poor roads, as well as updating rail stations and airports. The PLN94bn poured into the effort - 90% from the public purse - saw this transport infrastructure built three to five years faster than would have been the case, reports the Financial Times.
That, claims Borowski, will offer the biggest boost from the event. "Because we have a better quality of infrastructure earlier, we receive an earlier gain in terms of higher productivity in the whole economy. It's about front-loading productivity," he states. "For economists, this is the most important part of Euro 2012. This economy can produce more than it would produce in a scenario without the Euro (tournament)."
What is not mentioned is the drag effect produced by Poland's struggling construction companies. Tough competition for the infrastructure projects saw margins cut to the bone, and several of the biggest players are now struggling under heavy debt burdens, forcing the government to step in, either to mediate with the banks or - in the case of Polimex - to perform a rescue. Many worry that the potential impact on the banks may feed into the wider economy by limiting lending.
Graham Stack in Kyiv - Ukraine's largest lender PrivatBank has survived a stormy week of speculation over its future, but there are larger rocks ahead, with some market participants anticipating the ... more
Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more
bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more