Analysis World Cup 2022 Shops on target: Qatar retailers set for $1.2bn World Cup windfall By Andy Sambidge November 19, 2022 Reuters/Jorge Silva Argentina fans on Copacabana beach in Rio during the 2014 World Cup. Visiting fans represented 0.7% of the population in Brazil. For Qatar, the percentage will be far higher Qatar’s GDP growth is predicted to hit 5.2% in 2022, analysts sayClothing and sporting goods shops forecast to see biggest sales boostBut demand-side pressure and inflation are expected too Qatar’s retailers are tipped to be big winners at the 2022 World Cup. New forecasts for the tournament’s impact, compiled by Fitch Solutions, suggest that the sector can expect a $1.2 billion windfall in the fourth quarter. Fitch is predicting that the Fifa competition will drive a sharp rise in Qatar’s GDP growth from 1.5 percent in 2021 to 5.2 percent this year – the country’s fastest annual growth since 2014. The tournament, which begins on November 20 when the hosts play Ecuador, “will have immediate positive effects” on Qatar from the perspectives of GDP growth and the balance of payments, the analysts said, via higher consumption, government spending and services exports. However, they also warned that the short-term surge in Qatar’s population would lead to substantial demand-side pressure, which will contribute to above-trend inflation and require a significant increase in goods imports, including food and beverages. The fourth quarter is also set to see a fall in the volume of liquefied natural gas available for export. Winter World Cup may be nightmare for British storesRents for Qatar tenants soar ahead of World CupQatar may change dismantling plans for World Cup stadiums The Qatari authorities are expecting up to 1.7 million foreign visitors for the tournament – a huge influx for a country with just under 3 million permanent residents. In the two previous World Cups, Russia 2018 and Brazil 2014, visitors represented just 2.5 percent and 0.7 percent of the population respectively. The Fitch report predicted, not surprisingly, that the tournament’s “most immediate benefits will be to the hotels, restaurants and entertainment industries and wholesale and retail trade”. World Cup hotel bookings are forecast to add an extra $470 million to accommodation revenues in the fourth quarter of 2022. The country has built more than 100 hotels for the event. The government has also leased two luxury cruise liners for the tournament, which will be moored at Doha’s Grand Terminal, adding another 3,898 rooms. Arts, entertainment and recreation make up 1 percent of Qatar’s GDP and the sector is set to benefit from 90-plus large-scale events and offerings taking place alongside the football. These include the FIFA Fan Festival, the Corniche entertainment centre and watersports activities along Ras Abu Aboud Beach. Retail accounts for about 6.3 percent of GDP, according to Fitch. During the World Cup, clothing shops, sporting goods stores and supermarkets are expected to see the biggest sales boost from visiting fans – as was reported in Russia four years ago. Qatari residents are also forecast to hit the shops and entertainment venues in increased numbers, to soak up the World Cup atmosphere. Qatar’s shopping malls and supermarkets are expected to benefit the most from visiting fans and to also see an increase in Qatari residents. Picture: Creative Commons Feeding hungry football fans Although the net impact of the World Cup will be positive, the influx of visitors will lead to a pronounced uptick in the country’s goods import bill. This will mostly be driven by higher food imports during the tournament, as well as by stronger retail activity. Higher demand will also feed into an uptick in prices for goods in Qatar’s consumer price index basket, adding to supply-side inflation pressures stemming from Russia’s war in Ukraine. “All things considered, we project that headline prices will rise by 4.4 percent year-on-year in Q4, significantly above the quarterly pre-pandemic trend of 1.6 percent year-on-year between 2013 and 2019,” Fitch said. A fall in quarter-on-quarter gas export growth is also expected during the tournament. Qatar typically produces around 90 percent of its electricity from natural gas, but the energy-intensive desalination processes required to provide drinkable water, paired with air conditioning demand for stadiums, hotels and retail centres, will require a “significant increase in electricity output”. Fitch also predicts that the tournament will be an opportunity for Oman and Saudi Arabia to market themselves as tourist destinations. “As some of the World Cup fans will have the opportunity to visit these sites during their stay in Oman and Saudi Arabia, this will play a role in accelerating the global recognition of both countries as potential tourist destinations, and thus benefit the tourism industry in the long-term,” they said. A successful World Cup could boost Saudi Arabia’s joint bid with Egypt and Greece to host the tournament in 2030 and its campaign to host the World Expo in Riyadh the same year.