Like most people in the Netherlands, Hein Schotsman is a rabid soccer fan who'll be pulling for the Dutch team in next month's World Cup. But as an economist at European banking giant ABN Amro Mr. Schotsman has another favourite - Germany.
According to a detailed analysis of the 32 countries in this year's tournament, Mr. Schotsman is convinced that a win by the Germans would boost the global economy. Here's how: Germany is among the world's biggest economies and has a large trade surplus. A win by the Germans would boost domestic confidence and spending, thus increasing imports from other countries.
"A German victory will result in a relatively big dent in the German trade surplus, which is best for the stability of the world economy. This is just what is badly needed after the credit crisis," Mr. Schotsman said in a report released Tuesday called Soccernomics 2010.
In an interview from Amsterdam, Mr. Schotsman said he has also picked a likely winner of the event. "In my heart I think that Spain will probably win," he said, citing world rankings and Spain's talented players. But given Spain's current economic woes, he acknowledged that a Spanish victory might be bad for the global economy. "It's not that serious but it's better if Germany wins," he said.
Which winner would be worst for global economic growth? Mr. Schotsman picked the United States, noting that an American victory could worsen that country's already large trade deficit (a win by North Korea might also send the wrong economic signals, he added).
The World Cup is a tricky event to forecast. There have been 18 tournaments so far and only seven countries have won - Brazil (five times), Italy (four), Germany (three), Argentina (two), Uruguay (two), France and England. That hasn't stopped other economists from trying.
In a lengthy report released last month Andreas Hoefert, chief economist at Swiss-based UBS Wealth Management, concluded Brazil has the best chance of winning, at 22 per cent; followed by Germany, 18 per cent; and Italy at 13 per cent. He gave Spain a 4 per cent chance, the same as England.
Mr. Hoefert played down the economic benefits of winning the World Cup. "While there have been some studies made that the "feel good" factor after your team has won the World Cup could actually increase your mood for spending I wouldn't overestimate it," he said.
As for his personal favourites, "I would say Spain, Argentina and Brazil, which have the most talented players and I wouldn't be disappointed either if England would manage to win it. My wildest favourite however would be Cote d'Ivoire both because I am always stunned by Didier Drogba's striker skills and because it would be really cool if an African team could win the World Cup.
"Successful forecasting can often depend as much on luck as on skill, which is a lesson that is too often forgotten when it comes to quantifying the future."Report Typo/Error
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