Qatar’s 2022 FIFA World Cup – How Controversy Shapes Economic Fundamentals  

By Ashwaty Nambiar

The significance of the 2022 World Cup is portrayed through the principle of it being a first, both in the sense that it is being held in the Arab world, and in that it is being held in the Northern Hemisphere’s winter months due to the intolerable conditions Qatari summers present. 

Not only has this change disrupted the European football calendar, in which the FIFA world cup is one of the biggest summer sporting events, but it has instilled the idea of ‘unconventionality’ in the minds of many – an idea that is being reflected in the controversy surrounding this year’s competition. There is therefore much to explored based on this – specifically, how does controversy shape the economic fundamentals that surround such an event?  

Firstly, as mentioned, Qatar is the first Middle Eastern country to host the FIFA world cup; this presents the opportunity to expand to a completely new, incredibly wide audience. To many, then, the event is now much more accessible. In combination with this, the novelty of the event being a ‘first’ has fuelled a surge in demand for tickets to matches as well as associated goods such as transportation and accommodation. 

In terms of aggregated demand and GDP, Qatar has the highest GDP per capita in the world and thus, spending can be assumed to be relatively high. The World Bank has predicted a 3% increase in GDP around the World Cup period – this will likely be exaggerated by hype before and after the cup takes place both regionally and globally, especially considering the previously highlighted significance of this year.  

Where GDP is comprised of consumption, investment, government spending and net exports, each of the components can be considered separately regarding how they contribute to the World Bank’s projected 3% increase.  

Firstly, continuing the above discussion, demand for match tickets will be relatively inelastic, and this will contribute largely to the consumption component. Additionally, those attending matches will account for expenses including with transport, accommodation, meals, and general tourism, further fuelling an increase in consumption, and therefore overall GDP. Ultimately, as consumption is the largest contributing factor of GDP, this surge through the tourism sector will result in a substantial rise in Qatar’s GDP.  

Secondly, looking at investment as a contributing factor, it looks likely that, given the scale of the World Cup, many firms will see it as an attractive investment opportunity and commit to operations that contribute to World Cup based projects, thereby further contributing to the country’s GDP; this will be seen on both a local and international scale. Government spending will also rise alongside this as public sector projects as well as some private ones will need to be funded or subsidised by the government, thus contributing to a further increase in GDP.  

GDP increases are reflected in another economic fundamental – inflation rate. An increase in GDP can also be referred to in terms of aggregate demand where an increase in aggregate demand (and therefore output) results in a higher average price level to counter excess demand, and thus, as this happens in the long-term (as the effects of this will be immense), the economy will settle at this higher price level, resulting in inflation as shown by the GDP increase prediction. 

Considering the inverse relationship between inflation and unemployment rate, this is the final fundamental that need be discussed – the intensity of demand for the event by consumers generates need for the appropriate infrastructure. 

Qatar has taken to the construction and renovation of 8 stadiums, their international airport, a metro system, and around 100 new hotels. This has resulted in both an extreme increase in demand for labour from existing firms, and the emergence of new firms trying to break into the market. Since there are time pressures and other necessities associated with these forms of production, it has been seen that such firms are offering a higher wage relative to the market wage to meet the necessary labour requirements, as well as making attempts to motivate workers to engage in more efficient methods of production. 

However, there has been a lot of controversy surrounding the World Cup. Not only did Marseille’s mayor, Benoit Payan, refer to it as a “human and environmental disaster”, but there have been many reports on the deaths of many migrant workers, which poses a key social issue. Consequently, many have chosen to boycott the event, as well as not show the matches in public. Additionally, there have been many other concerns to do with the LGBTQ+ community, as well as the treatment of women in the country.  

Nevertheless, it is unlikely that the controversy surrounding the World Cup will have as severe an impact as some may think. Qatar has worked to move around the rules and rigid social norms typically seen in the country, and FIFA has relentlessly stated that all construction and production have been done appropriately.  

Alongside this, many surrounding countries such as the UAE, Saudi Arabia, Kuwait and Oman have majorly contributed to these operations. As an example, the national carriers of these countries (Emirates, Air Arabia, etc.) amongst other airlines have started a shuttle service that allows passengers to spend less than a day in Qatar. This suggests that demand is expected to be incredibly high and thus, it’s worth stating that, whilst controversy may have a slight effect on expected demand, it will not cause a significant impact.  

To evaluate, considering the level of controversy surrounding the World Cup, it can be said that the implications of this will be massive on how it is viewed. On the one hand, it can be said that the controversy may dampen the levels of expected demand and further, levels of output and GDP. Alternatively, the attention the event has garnered due to such negative attention may further fuel demand.  

It is likely that the outcome will form around the latter considering, as mentioned, the inelastic demand surrounding all aspects of the event – especially as it is thought of to be quite an iconic one, being the first in the Arab world and one of the biggest sporting events of all time.  

Thus, it can be said that controversy shapes many economic fundamentals such as (aggregate) demand, inflation rates, and unemployment, as detailed above. However, it does not have a limiting effect as many would believe, rather, controversy simply exaggerates attention received, resulting in these effects being emphasised.  

Image Source: David Ramos/Getty Images

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