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For football fans everywhere, there was some trepidation when Russia was announced as the host of this years world cup. However so far the fears seem to have been unfounded at least with regards the infrastructure required to host such an event. Obviously the main fears are around potential violence and what sort of welcome football fans will receive but it’s likely that these will not be issues either as President Putin is keen to use the event to promote Russia.
He won’t be the first leader to bank on a huge economic boost on the back of the tournament. However in passed years this has not been as large as hoped for, certainly the South African economy didn’t benefit quite as much as many had hoped. Yet it certainly will bring an exciting atmosphere to the football fans who are little bit more adventurous than those of us who simply what Match of the Day online on a Saturday night!
So what can the economy expect? Well it will almost certainly bring a short term boost to the economy in many sectors. The Russian Central Bank is hoping that the boost can be somewhat targeted as it has placed stadiums in areas of the country which need this sort of investment. The increase in spending was probably required anyway, so the chance to recoup some investment is certainly welcomed by Putin. He is of course hoping to showcase the country as a global superpower once again, and it’s likely that spending will be fairly lavish in some public facing areas as well as in security.
There should be a growth in jobs and a similar increase in the demand for consumer services and products. This should continue the positive growth that the Russian economy has experienced in the last year after a sharp fall in the previous two years largely related to the oil price.
The tournament is spread over 11 cities and it is believed will generate an additional .2% of gross domestic product in both the second and third quarters. This doesn’t sound huge but it is in fact a very large rise in response to a single event like this. President Putin’s hold on power though is heavily reliant on improving the living standards of the average Russian. There is a danger here though in that inflation is likely to rise particularly in those cities as thousands of visitors arrive in a short time.
These price rises will likely occur in things like hotels plus ordinary goods and services in line with the increased demand. .The Russian authorities are however likely to clamp down on any excessive profiteering and abusing visitors. Many visitors have been in fact attempting to bypass these price rises by booking using a Russian IP address like this in order to access domestic prices wherever possible.