The impact of the World Cup on the economy and relations between Brazil and Qatar
Qatar as host country
The 2022 FIFA World Cup™ is one of the biggest events on the planet. The interest of spectators from all over the world in following the matches, parties and everything that involves the world of football during the more than 30 days of the tournament also arouses curiosities about what happens and what life is like in the host country. Political, social, economic and cultural issues come to the fore and become important at a global level, not only as a background for the main sporting celebration in the world, but also as guiding basic principles that govern possible international relations with the small country insular.
Qatar is an Islamic country, with a theocratic regime that fundamentally follows the precepts of Sharia – the traditional legal system of Islam. The orthodoxy with which such rules are applied has generated wide discussions regarding the violation of the rights of women, immigrants and homosexuals, and Qatari law prohibits and severely punishes same-sex relationships. With that in mind, several institutions and national teams, especially European ones, announced protest measures in favor of human rights and even provoked the commotion of boycotting the event in their respective populations. However, despite all the criticism and demands for positions, the president of FIFA, Gianni Infantino, defended the Cup in Qatar and stated, in a recent speech on November 19, that it will be “the best in history”.
The economic impacts
Surrounded by controversies, the 2022 World Cup also stirs up the international market and disrupts the commercial sectors. Naturally, worldwide consumption grows and a lot in times of the World Cup. However, as it takes place between November 20th and December 18th – and not during the middle of the year as it always happened, due to the extreme heat in the Arab country – the event is encompassing the period of other commemorative dates and, therefore, with a trade already greatly stimulated. Black Friday, which this year begins on November 25th, expands the promotions of countless products and, in the context of the World Cup, encourages the correlated sectors, especially household appliances (televisions to watch the matches), clothing ( national shirts and themed accessories) and food (alcoholic beverages and snacks).
The months of December and November also include Christmas, whose commercial stimulus is one of the biggest of the year and significantly increases money circulating in the economy. According to a survey carried out by the Credit Protection Service (SPC Brasil) and by the National Confederation of Shopkeepers (CNDL), it is expected that around 60 million people will make purchases in trade and in the service sector in support of the World Cup do Mundo during Christmas and Black Friday, injecting R$ 20.3 billion into the economy. These commemorative dates should still increase sales by 12%, compared to the first half of 2022, according to data from the ABV (Associação Brasileira do Varejo). It is also important to emphasize that, in contrast to the increase in consumption, it is estimated that there will be a considerable decrease in production, since it is customary for Brazilian companies to relax professional obligations on game days and reduce the workload of workers so that they can watch the matches. Thus, it is estimated that Brazil loses around BRL 85 billion due to the games that will take place on working days, according to Money Times.
Another segment that is also boosted is the tourism sector which, together with aviation, intensifies movements, especially in the host country. According to specialists at CM Capital, by gaining visibility and attracting visitors, the assets of Qatar and related companies tend to respond positively to the huge flow of people. In this way, tourism companies, such as CVC, and airlines, such as Gol and Latam, represent good investment and partnership opportunities in the period. However, this excitement is compounded by the wide availability of jobs offered by the Qatari economy, which, by opening more than 7,000 job openings in the country's hotel sector alone, aroused interest in workers from all over the world in exchange programs and other activities. ways to enjoy the trip.
The financial market is yet another sector heavily affected by events surrounding the World Cup. Stock markets across the globe suffer falls or rises as a result of events, mainly within the field. According to a study carried out by the European Central Bank (ECB), it has been proven that on match days, trading activity drops sharply, especially if the national team is one of the competitors. It is estimated that the average number of trades decreases by 45% and the number of quotes offered is reduced by around 30% during departures from the country in question. In this sense, it was assessed that market activity is significantly below the usual benchmark even before the match starts, and continues to be lower during the 45 minutes after the match has ended. At the half-time of the game, trading activity recovers somewhat compared to the real time of the game, but remains substantially lower than on the benchmark days.
The Brazil-Qatar relationship
With an economy based predominantly on the exploitation of oil and natural gas (corresponding to more than 50% of the national GDP, 85% of export revenues and 70% of government revenues), Qatar has experienced an abrupt growth in recent decades. Independent and extremely poor in the 1970s, the country managed to take advantage of the high demand for its natural resources and became an investment and modernization center in the Middle East. Today, the country of just 11,571 km² has the 6th largest GDP per capita and the 3rd largest natural gas reserve on the planet. With this in mind, the economic relevance of the host country of the World Cup has become international and has attracted the interest of partners from all parts of the globe.
With Brazil between the years 2000 and 2018, it grew from $27 million to $540 million. In 2021, Brazil exported over US$284 million to Qatar and imported nearly US$800 million. Among the main exported products, leading the ranking: poultry meat and its edible offal (47%), non-electric motors and machines (12%) and tubes and hollow profiles, accessories for tubes, of iron or steel (11%). On the other hand, the most imported businesses from the Arab country to Brazil belong to the category of fertilizers or chemical fertilizers, which represent 88% of the total. However, it is imperative to emphasize that, despite the trade balance deficit for Brazil, our country still represents the 18th main trading partner of Qatar and this, in turn, is in the 44th position in our ranking of imports.
In small nation it is possible to conclude the golf view represents a range of economic opportunities for future international partners and, above all, Brazilians. Bilateral cooperation has its benefits and efficiency proven in the various agreements already signed between Brazil and Qatar, which include: the increase in daily flights by Qatar Airways connecting the two countries – boosting Tourism and Trade; the promotion, signed in 2010, of the exchange of experiences in the fields of visual arts, music, theater, dance and bibliographic archives – diversifying Culture; and the acquisition, by Companhia de Energia do Qatar, of part of the sepia pre-salt field (21% of the oil field), located in the Santos Basin – boosting the Economy and the Energy Sector. Moreover, the euphoria, both emotional and financial, brought by the World Cup still signals that the current situation could not be the best to expand collaboration and, consequently, mutual gains for Brazilians and Qataris.
By: Lucas Leite on 11/25/2022
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