German economy might absorb World Cup effect

FRANKFURT (AFP) - Germany's romp to World Cup victory captivated the nation and fuelled sales of football merchandise, beer and sausages, but it had little impact on financial markets Monday.

With Europe's biggest economy already in good shape owing to buoyant domestic demand, the long-term economic impact of the 2014 tournament may actually prove rather limited, analysts said.

On the floor of the Frankfurt stock exchange, adorned with the national flag, many traders had swapped suits for national football shirts and watched replays of the match highlights in between trades.

But - following the overnight street parties that broke out across the country after the win - there were few initial fireworks in trading, as bigger gains waited in the wings.

Only after trading got underway in New York, did the blue-chip DAX index begin to post solid gains, in part due to better-than-expected results from US banking giant Citigroup.

"What happened (in Brazil) was really nice. Traders are very happy, but they're also very tired," said Raimund Straetz, a bond trader at ICF AG, keeping a close eye on his trading screen.

"You mustn't expect the victory to have much of an effect on the stock market," said Robert Halver, analyst at Baader Bank. "Investors are still preoccupied with geopolitical and banking crises." Holger Bahr at DekaBank agreed, telling AFP that "for people who like football, it's big of course. But the economic repercussions are really quite limited." This is all the more the case because the economic situation was already rather good, Bahr said.

In 2006, when Germany hosted the World Cup and the national team made into the semi-finals, the economy was in very different shape and had more to gain from the feel-good effect.

This time round, Germany is already Europe's chugging growth engine.

"Most surveys show that consumer confidence is already very strong and Germany is expected to enjoy a long period of very presentable growth in the coming years," said Berenberg economist Christian Schulz.

At a news briefing in Berlin, a spokesman for the economy ministry said Monday that the government had no plans to upgrade its growth forecasts.

One iconic company was riding the World Cup wave however.

Adidas, the maker of sportswear and equipment, was the official sponsor of both World Cup finalist teams. It has already sold more than two million of the German national team's football shirts.

The country's supermarkets, bars and restaurants have welcomed soaring consumption of beer and food meanwhile as masses of spectators crowded open-air broadcasts to watch the Mannschaft notch up one victory after the next.

DekaBank's Bahr forecast that sales of beer and ice-cream "will certainly have increased in the past few days" as people partied outside.

A spokeswoman for Joey's Pizza delivery service said sales had risen 20 percent throughout the tournament, and doubled on the evening of the final.

Cafes and restaurants also benefitted despite capricious weather, with the hotel and catering federation Dehoga noting that "beer gardens, cafes, and bistros welcomed millions of fans".