Swiss economy to benefit from Olympics and World Cup

Football World Cups tend to bring more economic than sporting joy to Switzerland Keystone

Major global sporting events have a noticeable knock-on effect for the Swiss economy, even if they are held outside of Switzerland, forecasters have noted. The football World Cup and the Winter Olympic Games, for example, are expected to boost Swiss economic growth next year.

The KOF Swiss Economic Institute is the second forecaster to pick up on the phenomenon, following the State Secretariat for Economic Affairs (Seco) earlier this month. On Thursday, KOF said Swiss gross domestic product (GDP) should rise 2.2% in 2018, compared to 0.8% this year.

There are a range of factors influencing national economic productivity, but sporting events have been highlighted for the first time by experts gazing into their crystal ball. 

Switzerland has built a long-standing reputation has the neutral host country for sporting organisations, such as FIFA, UEFA and the International Olympic Committee. These pull in vast sums of money in ticketing, broadcasting and licensing revenues. 

Most of this windfall is redistributed to associations and initiatives in other countries, but some money is held back to pay for staffing and infrastructure – such as FIFA’s World Football Museum that opened in 2016 in Zurich or the IOC’s new HQ currently being built in Lausanne.

Money spinner

The 45 international sporting bodies based in Switzerland add more than CHF1 billion ($1 billion) to Swiss coffers every year, according to a research paper in 2015. 

Seco estimates that the sports and entertainment industries contribute 2% to Switzerland’s economic output every year. Major sporting events can add between 0.2% to 0.3% to GDP growth, or reduce output by the same margin in years that do not have any major sporting events. This is not a huge margin, but big enough to attract the attention of economists.

“In the coming year [2018], the Winter Olympics will be held in South Korea and the football World Cup in Russia, which will have a special effect on Swiss economic performance,” noted KOF in its GDP forecast released on Thursday.

A range of other factors, such as an expected upturn in global economic fortunes, is tipped to boost Swiss economic growth to 2.2% next year. But fitful business activity, which fell below expectations in the first six months of 2017, has resulted in KOF revise its GDP growth expectations downwards this year – now 0.8% as opposed to the 1.3% prediction in July.

Jan-Egbert Sturm, head of KOF, said that GDP growth would have been 1% this year had there been sporting events. Likewise, the forecast for 2018 would have been only 2% if it were not for the Olympic Games and World Cup.

Like other economic forecasters, KOF also expects prices to rise gradually and unemployment to drop in the coming two years. The institute forecast GDP growth of 1.9% in 2019.

Sports organisations in Switzerland

The IOC was the first international sports body to come to Switzerland and has been in Lausanne since 1915.

Canton Vaud, of which Lausanne is the capital, is home to about 20 sports governing bodies. In addition to the IOC, they include the Court of Arbitration for Sport (CAS), the European football union UEFA, and the world bodies governing gymnastics (FIG), cycling (UCI) and volleyball (FIVB).

Among the organisations based elsewhere in Switzerland are the governing bodies of football, (FIFA in Zurich), basketball (Geneva), handball (Basel), ski (Oberhofen, canton Bern) and ice hockey (Zurich).

Switzerland is attractive to such governing bodies for many reasons: its geographic location, highly qualified work force, political stability, neutrality, security, quality of life, plus an attractive tax regime and legal code.

Sports bodies based in Switzerland enjoy association status. Associations are not obliged to register with the state nor to publish their accounts. They are granted tax breaks and flexible legal terms that allow them to govern their own affairs and are generally exempt from Swiss anti-corruption laws.