GLOBAL MACRO RESEARCH | June 11, 2018 | 3:15AM BST
THE WORLD CUP
AND ECONOMICS
2018
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THE WORLD CUP 2018 DREAM TEAM
(as selected by you!)
Here is our 2018 Dream Team, selected by you, the client. Once again the team is organised in a 4-3-3 formation, but with this year’s edition we introduced
the possibility to pick the head coach. Congratulations to Mr. Joachim Löw for being the first to win this coveted award, and to Lionel Messi for being – as
in 2014 – the top pick with 75% of the votes. And consolations to Messrs Courtois, Varane, Iniesta, Salah and Deschamps, who narrowly missed out – up
to them to prove, over the next weeks, that they deserved to be in the Dream Team!
David de Gea
(ESP)
Manchester United
Joshua Kimmich
(GER)
Bayem Munich
Sergio Ramos
(ESP)
Real Madrid
Mats Hummels
(GER)
Bayem Munich
Marcelo
(BRA)
Real Madrid
Toni Kroos
(GER)
Real Madrid
Kevin De Bruyne
(BEL)
Manchester City
Philippe Coutinho
(BRA)
Barcelona
Lionel Messi
(ARG)
Barcelona
Cristiano Ronaldo
(POR)
Real Madrid
Neymar
(BRA)
Paris Saint-Germain
MANAGER
Joachim Low
(GER)
Keeper:
David de Gea (ESP):
The Manchester United keeper
has dethroned Manuel Neuer
between the sticks in the latest
edition of the Dream Team with
45% of the votes, 15% more
than the German.
Defence:
Joshua Kimmich (GER):
The promising Bayern Munich
defender replaces Dani Alves
at right-back: time to make
way for the young!
Sergio Ramos (ESP):
The only defender to keep his
slot from the 2014 team. The
experienced Spaniard was the
top pick in defence with more
than 60% of the votes.
Mats Hummels (GER):
The German made the team
only by a thin margin
over his Bayern Munich
teammate Boateng.
Marcelo (BRA):
With nearly 60% of the
votes, nobody came close to
matching the claim for
Marcelo at left-back.
Midfield:
Kevin De Bruyne (BEL):
The Belgian was by far the top
pick in midfield with more than
50% of the votes after his
brilliant club season.
Toni Kroos (GER):
The German outperformed his
club teammate Luka Modric by
only 25 votes and N’Golo Kante
by 35 votes and will act as
holding midfielder for the team.
Philippe Coutinho
(BRA):
Thanks to a strong season, first
at Liverpool and then
Barcelona, the Brazilian
squeaks into the Dream Team
ahead of Paul Pogba of France.
Attack:
Lionel Messi (ARG):
As in 2010 and 2014, the
Argentinian is again the top
pick among clients. Will this be
the time he brings the cup back
to the Albiceleste?
Cristiano Ronaldo
(POR):
The Portuguese star closely
follows Messi in the votes, and
will try to lead Portugal to
victory after their 2016 Euro
Cup success.
Neymar (BRA):
Along with Messi, Ronaldo and
Sergio Ramos, the Brazilian
was also in the 2014 Dream
Team and was selected by
almost 40% of clients.
Coach:
Joachim Löw (GER): With 60% of the votes, the experienced head coach
of Germany was an easy choice for our clients after leading his team to the
2014 trophy.
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 1
The World Cup and Economics 2018
It is that time. Summer is in the air, the greatest competition in the world is about to begin, and we have published the sixth edition of
our book on the World Cup and Economics. This traditionally eccentric mix of economic insight, tenuous correlations and footballing
views remains one of our most popular publications, and we invite you to use it as a guide and companion through the upcoming
competition.
We have turned again to a famous guest contributor to provide an expert perspective on the competition. Carlo Ancelotti, famous Italian
player and legendary manager, shares his thoughts on what it takes to win the World Cup; his top tips – Brazil and Spain; and how the
competition in Russia could be different. As Clemens Grafe describes, a World Cup tournament in Russia is long overdue, but football in
Russia has some shortcomings in common with the economy, and the preparation going into the opening game has been less than ideal.
Our economists from across the world have a page on the 31 other participating countries. The economic analysis is thoughtful, the
footballing assessment is balanced, but the conviction level on their respective country performance is overly strong. If only they had the
same strongly held beliefs about their regular views.
The core of the publication is the forecasting model – where this year, Adam, Manav and Nicholas augment the typical team level data
with player level characteristics. After hours of number crunching, 200,000 probability trees, and 1 million simulations, some of the
results are strikingly intuitive: England meets Germany in the quarters, where Germany wins; and Germany meets Brazil in the final, and
Brazil prevails. For the doubters out there, this final result was cross-checked in excruciating detail by our (German) Chief Economist Jan
Hatzius! The match-by-match probabilities – which we will update throughout the competition – produce some genuinely interesting
results. While Germany is more likely to get to the final, France has a marginally higher overall chance of winning the tournament, and
along with Brazil, Germany, and France, Portugal squeaks into the semis, ahead of Argentina.
We also include a pull-out calendar and the World Cup dream team, selected by you, our clients from across the world. Based on the
several hundreds of votes submitted, we have narrowed the list down to a final 11 playing in a 4-3-3 formation. As in previous editions,
Lorenzo Incoronato has highlighted some key macro trends in World Cups, and taken the ‘dodgy correlations’ featured in 2014 to new
heights, showing how the ability of strikers to score from the spot is not unrelated to the ability of central bankers to hit their inflation
targets.
We hope you enjoy the publication and the World Cup, and it provides some break from these difficult markets.
Good luck to all the teams and our clients.
Kamakshya Trivedi and Sven Jari Stehn
June 2018
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 2
The World Cup and Economics 2018 ............................................................................................................................................................ 1
A Statistical Model of the 2018 World Cup .................................................................................................................................................. 3
Interview with Carlo Ancelotti ...................................................................................................................................................................... 6
Russia ................................................................................................................................................................................................................ 7
Argentina ........................................................................................................................................................................................................... 9
Australia .......................................................................................................................................................................................................... 10
Belgium ........................................................................................................................................................................................................... 11
Brazil ................................................................................................................................................................................................................ 12
Colombia ......................................................................................................................................................................................................... 13
Costa Rica ....................................................................................................................................................................................................... 14
Croatia ............................................................................................................................................................................................................. 15
Denmark .......................................................................................................................................................................................................... 16
Egypt ............................................................................................................................................................................................................... 17
England ........................................................................................................................................................................................................... 18
France ............................................................................................................................................................................................................. 19
Germany .......................................................................................................................................................................................................... 20
Iceland ............................................................................................................................................................................................................. 21
Iran .................................................................................................................................................................................................................. 22
World Cup Groups, Calendar and Venues
Japan ............................................................................................................................................................................................................... 23
Korea Republic ................................................................................................................................................................................................ 24
Mexico ............................................................................................................................................................................................................ 25
Morocco .......................................................................................................................................................................................................... 26
Nigeria ............................................................................................................................................................................................................. 27
Panama ........................................................................................................................................................................................................... 28
Peru ................................................................................................................................................................................................................. 29
Poland ............................................................................................................................................................................................................. 30
Portugal ........................................................................................................................................................................................................... 31
Saudi Arabia .................................................................................................................................................................................................... 32
Senegal ........................................................................................................................................................................................................... 33
Serbia .............................................................................................................................................................................................................. 34
Spain ............................................................................................................................................................................................................... 35
Sweden ........................................................................................................................................................................................................... 36
Switzerland ...................................................................................................................................................................................................... 37
Tunisia ............................................................................................................................................................................................................. 38
Uruguay ........................................................................................................................................................................................................... 39
World Cup trends viewed through a (light-hearted) economic lens ....................................................................................................... 40
Disclosure Appendix ..................................................................................................................................................................................... 43
Contents
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 3
When Lionel Messi observed that “in football…talent and elegance
mean nothing without rigor and precision”, he was clearly thinking
as much about the econometrics behind forecasting the score as
the tactics behind winning the match. But while selecting the best
starting eleven requires human judgment and experience, choosing
the best variables to predict the outcome of a game is better left to
a statistical model. Or more precisely, 200,000 models: harnessing
recent developments in “machine learning,” we mine data on
team characteristics and individual players to work out which
factors help to predict match scores. This gives us a large number
of forecasts, which are combined to produce an overall projection.
We then simulate 1,000,000 possible evolutions of the tournament
to gauge the probability of each team progressing through the
rounds.
Our key predictions are:
Brazil will win its sixth World Cup title—defeating
Germany in the final on July 15th (Exhibit 1).
France has a higher probability than Germany of winning
the World Cup (Exhibit 2). But its (bad) luck in the draw
sees it meeting Brazil at the semi-final stage, and the
team may not be strong enough to make it past Seleção.
Those looking for a repudiation of Gary Lineker’s
observation that “football is a simple game; 22 men
chase a ball for 90 minutes and, at the end, the Germans
win” will be disappointed: Germany is forecast to defeat
England in the quarter finals on July 7th.
Spain and Argentina are expected to underperform, losing
to France and Portugal in the quarter finals, respectively.
Despite the traditional boost that comes with hosting the
competition, Russia just fails to make it through the
group stage (Exhibit 3).
Football and Machine Learning: From Nottingham Forest
to Random Forest
We are drawn to machine learning models because they can sift
through a large number of possible explanatory variables to
produce more accurate forecasts than conventional
More specifically, we feed data on team characteristics, individual
players and recent team performance into four different types of
machine learning models to analyze the number of goals scored in
each The models then learn the relationship between
these characteristics and goals scored, using the scores of
competitive World Cup and European Cup matches since
By cycling through alternative combinations of variables, we get a
sense of which characteristics matter for success and which stay
on the bench. We then use the model to predict the number of
goals scored in each possible encounter of the tournament and use
the unrounded score to determine the winner. For example,
Germany narrowly beats England in the quarterfinals with vs
goals.
Exhibit 4 provides some intuition for how our framework works,
showing how the variables considered contribute to the overall
explanatory power of the model. We group together several team-
level and player-level variables for ease of exposition. Four
characteristics stand out. Team-level results are the most
important driver of success. Recent team performance—measured
with the “Elo” rankings—accounts for about 40% of overall
explanatory But even after taking team performance into
account, individual players make a difference. We find that player-
level characteristics—including the average player rating on the
team, as well as attacking and defending abilities—add another
25% of explanatory power. Recent momentum—as measured by
the ratio of wins to losses over the past ten matches—matters.
Similarly, the number of goals scored in recent games and the
number of goals conceded by the opponent team help gauge
success in the next game.
A Statistical Model of the 2018 World Cup
Exhibit 1: Brazil to win
Source: Goldman Sachs Global Investment Research.
1 1
1 France 5 Portugal
1 Iceland 1 1 5 Saudi Arabia
9 France # Portugal
0 9 Spain # Argentina 1
2 Uruguay 6 Argentina
2 Spain 0 1 0 6 Australia
# France # Brazil # Portugal
1 # Brazil # Germany # Germany 1
3 Brazil 7 Germany
3 Mexico 1 1 7 Switzerland
# Brazil # Germany
1 # Belgium # England 0
4 Belgium 8 Colombia
4 Poland 8 England
Round 16Round 16 Quarter Finals Semi-Finals Finals Semi-Finals Quarter Finals
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 4
Brazil is clearly the strongest team across these metrics, with the
highest Elo rating (Exhibit 5), talented individual players (Exhibit 6)
and a good win/lose ratio in recent games (Exhibit 7). We also see
why France and Germany run neck and neck for second: Germany
has a higher Elo rating than France, but France has performed
better in recent games. And France appears to have a more
unfavorable draw than Germany: if France and Germany started in
each other’s respective group, the most likely result would be a
Brazil-France final (although the winner would remain Brazil).
Spain’s chances are likewise diminished by a tough draw, facing
Portugal in the group, and needing to get past France and Brazil in
the knock-out stages. Finally, Argentina ranks higher on Elo than
Portugal, but loses to Portugal in the quarter finals due to poor
performance in recent games.
How Confident Can We Be?
It is difficult to assess how much faith one should have in these
predictions. We capture the stochastic nature of the tournament
carefully using state-of-the-art statistical methods and we consider
a lot of information in doing so (including player-level data). But the
forecasts remain highly uncertain, even with the fanciest statistical
techniques, simply because football is quite an unpredictable
game. This is, of course, precisely why the World Cup will be so
exciting to watch.
Manav Chaudhary, Nicholas Fawcett, and Sven Jari Stehn
We would particularly like to thank Adam Atkins of GSAM for
building the models and running all of the simulations.
Exhibit 2: A Close Race Between Germany and France,
Behind Brazil
Source: Goldman Sachs Global Investment Research
Exhibit 3: Saudi Arabia Ahead of Russia in Group Stage
Source: Goldman Sachs Global Investment Research.
Round 16 Quarters Semis Finals Champion
Brazil
France
Germany
Portugal
Belgium
England
Argentina
Spain
Colombia
Uruguay
Poland
Mexico
Denmark
Sweden
Iran
Peru
Russia
Switzerland
Australia
Croatia
Iceland
Costa Rica
Tunisia
Saudi Arabia
Serbia
Japan
Egypt
Morocco
Nigeria
Senegal <
Korea Republic <
Panama <
World Cup Probabilities
Group A Group B
W D L GF GA GD* Pts W D L GF GA GD* Pts
Uruguay 2 1 0 5 7 Portugal 2 1 0 5 7
Saudi Arabia 0 3 0 3 3 Spain 1 2 0 4 5
Russia 0 2 1 3 2 Iran 0 2 1 3 2
Egypt 0 2 1 3 2 Morocco 0 1 2 3 1
Group C Group D
W D L GF GA GD* Pts W D L GF GA GD* Pts
France 3 0 0 6 9 Argentina 3 0 0 6 9
Denmark 0 2 1 3 2 Croatia 0 2 1 3 2
Peru 0 2 1 3 2 Iceland 0 2 1 3 2
Australia 0 2 1 3 2 Nigeria 0 2 1 3 2
Group E Group F
W D L GF GA GD* Pts W D L GF GA GD* Pts
Brazil 3 0 0 6 9 Germany 3 0 0 6 9
Switzerland 0 2 1 3 2 Mexico 0 2 1 3 2
Serbia 0 2 1 3 2 Sweden 0 2 1 3 2
Costa Rica 0 2 1 3 2 South Korea 0 0 0 0 0
Group G Group H
W D L GF GA GD* Pts W D L GF GA GD* Pts
Belgium 2 1 0 5 7 Colombia 2 1 0 5 7
England 2 1 0 5 7 Poland 2 1 0 5 7
Tunisia 0 1 2 3 1 Japan 0 1 2 3 1
Panama 0 1 2 3 1 Senegal 0 1 2 3 1
*Goal difference uses the unrounded goal predictions from the model
1. Judging by explanatory power, our revamped models were five times more accurate than our earlier Poisson-based regression.
2. The models include a random forest, Bayesian ridge regression, Lasso regression, and a gradient boosted machine.
3. We use data from all World Cup and European cup tournaments and qualifying matches. Interestingly, when we include friendlies, we find that our models
become less accurate—perhaps because managers see a chance to experiment with new playing formations, or simply field a weaker team.
4. The Elo system was originally devised to rank chess players. It is a composite measure of national football team success that evolves depending on a team’s
results and the strength of its opponents.
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 5
Exhibit 7: Argentina Has Negative Momentum
Source: FIFA, Goldman Sachs Global Investment Research.
Exhibit 4: The Importance of Teams vs Players
Source: Goldman Sachs Global Investment Research.
Exhibit 5: Brazil is Ranked First
Source: Elo ratings, FIFA, Goldman Sachs Global Investment Research.
Exhibit 6: The Strength of Individual Players
Source: FIFA, Goldman Sachs Global Investment Research.
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
Spain Portugal Brazil France England Germany Belgium Argentina
Win/Lose Win/Lose
Win-Lose Ratio (Last 10 Games)
0
5
10
15
20
25
30
35
40
45
0
5
10
15
20
25
30
35
40
45
Team Ratings Player Ratings Recent
Performance
Recent Opposition
Performance
Recent Goal
Momentum
Percent Percent
Variable Importance by Type
Note: We use 53 seperate variables in our analysis
1900
1950
2000
2050
2100
2150
2200
1900
1950
2000
2050
2100
2150
2200
Brazil Germany Spain France Argentina Portugal England Belgium
Elo Rating
Index Index
79
80
81
82
83
84
85
86
87
88
79
80
81
82
83
84
85
86
87
88
Spain Germany Belgium Brazil France Argentina England Portugal
Index Index
Overall Player Ratings
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 6
Carlo Ancelotti is a former
Italian professional footballer
and one of the most pre-
eminent coaches in football
globally. As a player, he
appeared in two World Cup
competitions with Italy, and
is now one of only three
managers to have won the
UEFA Champions League
three times. He will manage
the Napoli football club for the 2018-19 season.
The views stated herein are those of the interviewee and do not
necessarily reflect those of Goldman Sachs.
Q. You have had a very glittering career playing in two World
Cups and managing teams to several titles, nationally and
internationally. What has been your experience of the World
Cup?
Carlo Ancelotti (CA): I was involved in three World Cups – in 1986
and 1990 as a player, and in 1994 as an assistant manager and it
was a fantastic experience, one of the best in my life. There is a
really strong motivation to be part of the national team and to play
for your country. And in the same way, all the players that are
involved will be really strongly motivated because it’s a fantastic
moment in their career.
Q. Who will be the four semi-finalists in your opinion at the
2018 World Cup and who do you think will go on to win it?
CA: I think there are two teams that can possibly win the World
Cup: Brazil and Spain. There is then a group of teams behind them
such as France and Germany that have a lot of experience in this
competition, and Argentina, as it has one of the best players at the
moment, Messi.
Q. And if you had to pick one winner, who would you go for?
CA: I think Brazil has more chances as the new manager has built a
really strong defence over the recent period. Hence, considering
that they also have fantastic offensive quality, they have, in my
opinion, a good balance to be the favourites for the World Cup.
Q. What do you think this World Cup will be remembered for?
CA: The most interesting fact may be that it won’t be as hot as it
would usually be when the World Cup is held in June. I think that
the cooler temperature in Russia can help teams to play with more
intensity and we may see more entertaining football for the
supporters.
Q. Which teams are most underrated and can surprise people?
CA: I think there are two teams that maybe are underrated.
Belgium has a lot of players that are playing in Premier League for
example. Croatia also has many players with experience and skills.
They could be a surprise in this World Cup.
Q You mentioned Messi who will be a key player for
Argentina. Any other players that everybody will be talking
about after the World Cup?
CA: Apart from Messi, there is Ronaldo and Neymar, and I think
you also have to look at Griezmann and Mbappe from France.
Q. Do you think it has become harder to win the World Cup
now relative to the past?
CA: It’s always difficult to win the World Cup because you have to
be in good physical condition with the right mentality. It’s always
difficult. But at the World Cup, differently from the European Cup
for the national teams, there are typically fewer surprises. At the
European Championship it can sometimes happen that Greece
wins the title or for example Portugal in the last edition. At the
World Cup the winner is typically from the same group of
countries, such as Brazil, Argentina, Germany or Spain.
Unfortunately, Italy cannot hope to win this competition this year,
but there will not be a big surprise for the winner.
Q. Do you think we will see a country from outside Europe or
Latin America win the World Cup in our lifetimes?
CA: The geography of football is changing and countries like China
and USA are trying to improve their knowledge about football. But I
am not sure I will be able to see in my lifetime a team like China or
USA winning the World Cup. It is very difficult, but you never know
in football.
Q. What are the main differences between managing a club
versus a national team at the World Cup?
CA: I think there is a big difference. A club manager has the time
to build a good playing style, a good philosophy, and good tactics.
By contrast, the manager of the national team doesn’t have the
time to do this because he cannot train the team every day. So,
you have to be really focused for one month to prepare for this
kind of competition, and sometimes more than the technical and
tactical aspects, the psychological aspect is important, in order to
motivate the players for this short period.
Q. You are going on to a new adventure to manage the Napoli
football club. What are your expectations for this new
adventure?
CA: I expect to do my best as always. I know really well the
atmosphere and the passionate supporters of Napoli because I
was an opponent at the time when Maradona was in Napoli. Napoli
did really well in the past couple of years, and I want to build on
that
Interview with Carlo Ancelotti
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 7
The 2018 World Cup
Russia beat joint bids by Spain and Portugal, The Netherlands and
Belgium, and by England, to host the Football World Cup 2018.
Russia (and the former Soviet Union) is the only European country
with a population larger than 10mn that has never hosted either a
European Championship or a World Cup. Hence, hosting this
tournament is overdue.
As the host nation, Russia did not have to qualify but the team’s
preparations have arguably not gone well. Russia now ranks 66th in
the FIFA ranking, the lowest position it has ever held and a sharp
deterioration from the 13th place it held in 2010 when it won the
contest to host the Cup.
Russia has been drawn together with Saudi Arabia, Uruguay and
Egypt in a group populated by emerging market economies.
Though Uruguay is the smallest, it is the clear favourite in the
group according to its FIFA ranking at position 17, compared with
Egypt at 46 and Saudi Arabia at 67.
Stanislav Cherchesov was appointed to coach the team after its
disastrous Euro 2016 campaign. He is a former top class
goalkeeper and, after coaching success in Austria and in the
domestic league, had led Legia Warszawa to the Polish Double in
2015/16. Unlike previous Russian teams, which typically were well
organised in defence but found it difficult to score, the current
team’s strength is arguably in attack. Though the team has
generally played its recent friendlies against strong opposition, it
scored 25 goals in 18 fixtures in the last two years, putting three
goals past reigning European champion Spain in November.
However, the team also conceded three goals in each of its last
three friendlies.
Injuries sustained by some key defenders are part of the reason for
this. Three long-standing defenders retired in 2016 and coach
Cherchesov has tried a double-digit number of players as centre-
back since. With two of the most promising ones missing the
tournament due to injuries, the Russian defence – apart from
stalwart goalkeeper Igor Akinfeev – remains work in progress.
Russia’s bad luck with injuries has not been restricted to its defence.
Key forward Alexander Kokorin from Zenit St Petersburg is injured as
well, increasing the pressure on Krasnodar striker Fyodor Smolov to
perform well. Fyodor has been one of the top two strikers in the
Russian league in each of the last three years. Russia’s mid-field will
likely include two wing-backs given that Cherchesov prefers a
formation with three defenders at the back. But who will fill these
positions is not yet settled, although one is likely to go to Alexandr
Samedov, who often also takes the set pieces.
In central mid-field many commentators thought that Cherchesov
should have relied on Igor Denisov from Lokomotiv Moscow, but
the coach hasn’t called on him since they were in the same team
at club level in 2015. Instead, Alexander Golovin, Roman Zobnin,
Daler Kuzyaev and Alan Dzagoev are likely to compete for the three
central mid-field positions, while Alexey Miranchuk is tipped to
start as an attacking mid-fielder behind Smolov, possibly supported
by his brother Anton, though veteran Yuriy Zhirkov might also still
play his role and add the necessary experience.
Football in Russia
Russia, and previously the Soviet Union, has a long tradition of
participating in World Cups. After the Soviet Union started to
compete for the World Cup in 1958, it only failed to qualify twice out
of 11 tournaments until 1990. One World Cup that it did not qualify
for was the one held in Germany in 1974, when the Soviet Union
refused to play the qualifying match in Chile following the coup that
had taken place there two months earlier. FIFA still held that match
without the visiting team being present and Chile scored into an
empty goal. Despite being one of the more frequent qualifiers, the
Soviet Union never managed to proceed past the Semi-finals, which
it lost to Western Germany in 1966. Russia, with a population that is
only half as large as that of the Soviet Union, has been less
successful, qualifying for 3 out of the 6 possible tournaments since
1994 but never getting past the group stage.
Russian football is arguably suffering from the same shortcomings
as the economy: Dutch disease, an excessive role of the state,
limited foreign integration and lack of competition. Arguably, these
factors have held back progress in recent years and are partially to
blame for Russia’s slide in the FIFA rankings. The Russian team is
the only one, apart from England, where almost all of the players
compete in the local league. The English football league boasts the
highest revenues and gate receipts per club of any of the major
leagues, and hence clubs can afford to pay the highest wages and
local players have little reason to move abroad. In Russia, wages
are high even though gate receipts are among the lowest, while
Russia: The 2018 World Cup Host
Statistics for Russia
Source: , FIFA Public Website
Odds: 40/1 World Ranking: 66
Date Venue Against Local Time
14-Jun Luzhniki Stadium Saudi Arabia 18:00
19-Jun Saint Petersburg Stadium Egypt 21:00
25-Jun Samara Arena Uruguay 18:00
Previous Appearances: 10 (3 as Russia, 7 as USSR)
Host Year Outcome
Sweden 1958 Quarter-finals
Chile 1962 Quarter-finals
England 1966 Fourth place
Mexico 1970 Quarter-finals
Spain 1982 Round of 16
Mexico 1986 Round of 16
Italy 1990 Round 1
USA 1994 Round 1
Korea/Japan 2002 Round 1
Brazil 2014 Round 1
Previous World Cup Results
Games Played 40
Won 17
Drawn 8
Lost 15
Goals Scored 66
Goals Against 47
Yellow Cards 38
Red Cards 3
1st Round Match Schedule
Won Drawn Lost
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clubs instead are disproportionately financed by sponsorship deals,
often provided by Russia’s natural resource companies.
Not surprisingly given the high wages, the English league also has
the highest share of foreign-born players (c65%), keeping
competition for local players high. Instead, the Russian league has
one of the lowest shares of foreign-born players (c43%): the
number of players per team not born in Russia is restricted,
keeping competition for local players limited.
Just like in the economy, the role of Russia’s state in football is
very large. Of the 36 teams in the first two divisions, 31 are run
either by local governments or by state-run corporations. With
average match attendance below 12,000 in the Russian Premier
League and TV rights making up just 10% of the league’s profits,
public investment gives the state unprecedented control over
clubs.
With foreign competition restricted and established players staying
at home, Russia’s best hope is to attract new entry internally and
build out its youth system. There has been a concerted effort since
2015 to do so, and applying best international practice there
already appears to have been some progress – although this World
Cup may come too early for some of the Russian protégés like
Zobnin, Golovin, Anton and Aleksei Miranchuk, who are all younger
than 25 years old.
The economy
Russia’s economy emerged from a two-year-long recession last
year, a downturn that was triggered by the sharp fall in oil prices
and the imposition of international sanctions in 2014. Cumulatively,
output fell by % in the recession and the recovery has been
slow. After growing by % in 2017, output remains below the
pre-recession level and we estimate that Russia has the second-
largest output gap among the countries we cover globally. The
recession was arguably deepened as a result of deliberate
structural policy choices that, in our view, continue to hold growth
below the -3% rate that we consider to be Russia’s current
potential.
Russia’s Central Bank (CBR) used the sharp sell-off in the Ruble in
2014 to successfully garner political support to finally float the
currency and correct Russia’s almost decade long inconsistent
policy set-up of having one of the most open capital accounts in
EM while not having a flexible currency. The CBR re-anchored the
Ruble by transitioning to inflation targeting, keeping real interest
rates very high to bring inflation down to target. As a result,
inflation is running well below the 4% target and, with real interest
rates still close to 5%, we do not expect inflation to reach the
target before 2020 at the earliest.
While the recent rise in oil prices could be expected to add to
demand and compensate for high rates, Russia has transitioned to
an oil stabilisation framework that saves 75-80% of the marginal
export revenue from oil prices above US$ per barrel in an oil
fund managed by the CBR as part of Russia’s FX reserves. Indeed,
in our assessment, the cap on oil production that Russia agreed
with OPEC has likely reduced growth by % directly, without
much of a boost to demand from prices. With inflation well below
target, the budget and the current account in healthy surpluses and
the private sector deleveraging, we think the authorities will loosen
the constraints somehow over the coming quarters and growth
should accelerate towards the -3% trend level.
We expect most of this loosening to be delivered by rate cuts of
175bp and we forecast rates to fall to %. However, there is a
risk that the government will instead use fiscal policy to boost
growth through infrastructure spending, in particular. While
Russia’s fiscal position comfortably allows for such expansionary
policy, it would increase the size and influence of the public sector
even further, and risk a stronger Ruble in real terms.
The state of the nation
President Vladimir Putin was re-elected in April and is restricted by
the constitution from running again in 6 years’ time. Prime Minister
Dmitri Medvedev was reappointed by the President, as were most
ministers. Recent speeches and decrees signed by the President
suggest that he believes that Russia has now achieved a solid
foundation both economically and in terms of national security. The
budget is back in surplus, inflation is at %, and state debt is the
lowest in the G20. Hence, fiscal policy does not need to be
tightened further, interest rates can decline and spending on the
military can be reduced unless the President perceives there to be
new threats.
The government has now been charged to develop by October
national projects that should help Russia to become one of the five
largest economies in the world. Policies should support both the
development of human and physical capital as well as productivity.
Russia’s population has been fairly stable, helped by a rise in life
expectancy of 7 years since the trough at 65 years in 2003.
However, the working age population has in recent years fallen by
slightly more than 1% a year, constraining growth. Although the
rate of decline is now diminishing as the fertility rate troughed in
2000 and has increased steadily since, one area of focus for the
next 6 years will be to improve both the quantity and quality of the
labour supply.
The government is also reported to be developing a programme to
invest in infrastructure to support the economy and reduce
unnecessary regulation that is holding back private investment.
That said, the success of these steps will depend on the response
of the private sector and so far that has been lacking. New
sanctions imposed by the US in April have, in our view, lowered
confidence among local and foreign investors even further, and the
risk is that ultimately the economy and investment process will
become even more dependent on the state, while technology
transfer is undermined by sanctions.
Clemens Grafe
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The 2018 World Cup
Argentina is currently in fifth place in the FIFA World Ranking, and is
again seen as one of the favourites to lift the World Cup, given the
recognised grit and world-class talent of its key players. Argentina
struggled to qualify: the team played under three different
managers and won only 7 of the 18 qualifying matches. Overall, it
finished third in the CONMEBOL tournament, behind archrivals
Brazil and Uruguay, managing to qualify only in the last match.
Argentina is drawn with Croatia, Iceland and Nigeria in Group D,
which is viewed as a somewhat easier than average group.
The alviceleste, as the national team is known, is coached by Jorge
Sampaoli. The main strength of the team is the vast international
experience of its individual players, unmatched energy on the pitch,
deep talent in every position, particularly in attack, and the top form
of its strikers. The main challenge for coach Sampaoli will be to
integrate individual talent into a consistent and harmonious
performing squad and to organise the team and flow of play around
its #10 superstar captain: 30-year-old Lionel La Pulga (the Flea)
Messi, the country's all-time leading goal scorer.
The team is hoping that Messi will repeat his dazzling performances
in the Spanish La Liga over the last few years, to lead them to the
ultimate soccer glory. At Barcelona he has won everything: nine La
Liga titles, four UEFA Champions League titles, and six Copas del
Rey. For his superb performance on the pitch, he has been awarded
five Ballon d'Or awards, and five European Golden Shoes. Messi is
a 2005 FIFA U-20 World Cup Champion and 2008 Olympic Football
Tournament Gold Medal winner, and is now seeking to avenge the
painful 2014 loss in the finals to Germany by finally bringing the Cup
home. But Messi is not alone, as he can count on a strong
supporting cast of other gifted young and veteran players, such as
Angel Di Maria, Gonzalo Higuaín, Sergio Agüero, Paulo Dybala and
Javier Mascherano, to name just a few, to overcome opposing
defenders and goalies without the need of a helping ‘Hand of God’.
The state of the economy
The outlook for the national team in the 2018 World Cup seems
brighter than that for the economy. Argentina experienced a shock
to its (external) funding conditions, with the USD gaining more than
40% against the ARS between early December 2017 and late May
2018. The authorities’ firm policy response (emergency rate hikes,
tighter fiscal targets and request for IMF assistance) and the rebuild
of risk premia across Argentine assets helped reduce the pressure
on financial assets, but sentiment remains fragile, and the financial
and economic picture as complex and vulnerable as before. The
policy measures adopted so far and the politically sensitive decision
to seek official IMF financial assistance may have helped to calm
markets, but did not solve the underlying fundamental problem: a
large fiscal deficit amid limited domestic funding alternatives.
Ultimately, macroeconomic rebalancing and the reduction of
external risks demand a steadfast reduction of the fiscal deficit.
The recent developments have eroded consumer and business
sentiment, and domestic and external financial conditions have
tightened. Given the challenging domestic and external
environment and sticky inflationary pressures, we expect monetary
policy to remain tight for a while. We also anticipate a faster pace of
fiscal consolidation (lower fiscal impulse to demand) to reduce large
external funding needs. The expected acceleration of inflation
should help the government to deliver a better fiscal result (as it
collects the inflation tax) but it will dampen demand by reducing the
real purchasing power of wages.
The state of the nation
President Mauricio Macri has embraced an overall orthodox and
investment-friendly policy mix but currently faces the biggest
economic and financial challenge of his tenure in office. The recent
episode of severe market distress and tightening of financial
conditions will likely force the economy into a short-term equilibrium
with less growth, more inflation, a weaker currency and potentially
rising political friction.
A key risk is that a weaker macroeconomic backdrop and the
decision to seek IMF financial assistance could deteriorate the
social and political backdrop and undermine governability conditions,
which could impair the ability of the Macri administration to deliver
and implement the IMF programme, whose negotiation is expected
to be concluded while the World Cup is underway. Against a testy
economic backdrop, nothing would lift the national spirit more than
seeing the Messi-led squad bring home the World Cup from Russia.
Alberto M Ramos
Argentina
Statistics for Argentina
Source: , FIFA Public Website
Odds: 9/1 World Ranking: 5
Date Venue Against Local Time
16-Jun Spartak Stadium Iceland 16:00
21-Jun Nizhny Novgorod Stadium Croatia 21:00
26-Jun Saint Petersburg Stadium Nigeria 21:00
Previous Appearances: 16
Host Year Outcome
Uruguay 1930 Runners-up
Italy 1934 Round 1
Sweden 1958 Round 1
Chile 1962 Round 1
England 1966 Quarter-finals
Germany 1974 Round of 16
Argentina 1978 Winners
Spain 1982 Round of 16
Mexico 1986 Winners
Italy 1990 Runners-up
USA 1994 Round of 16
France 1998 Quarter-finals
Korea/Japan 2002 Round 1
Germany 2006 Quarter-finals
South Africa 2010 Quarter-finals
Brazil 2014 Runners-up
Previous World Cup Results
Games Played 77
Won 42
Drawn 14
Lost 21
Goals Scored 131
Goals Against 84
Yellow Cards 111
Red Cards 9
1st Round Match Schedule
Won Drawn Lost
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A record-long qualification campaign. Now for the easy
part…
Over 29 months, a record 22 games and more than 250,000
kilometres travelled (6 laps of the globe!) – as far afield as
Kyrgyzstan, Jordan and Honduras – Australia’s qualification
campaign for the 2018 World Cup was a gruelling one. And in the
end, the pressure took its toll. Six days after successfully guiding
the ‘Socceroos’ to Russia, Coach Ange Postecoglou dramatically
quit – surprising players, fans and administrators alike. If not
unprecedented, it is certainly highly unusual for a coach to
voluntarily forfeit an opportunity to take his team to the greatest
football stage of all.
Lost in the drama of Postecoglou’s surprise resignation is that the
Socceroos arrive in Russia as both Asian Champions and one of
only 12 teams to have qualified for each of the past four
consecutive World Cups. This is no small feat in the context of a
sole prior appearance in 1974 (with ‘mullets’ on full display) and the
current squad’s lack of genuine ‘world class’ players – with only
three (Mooy, Ryan and Leckie) starting regularly in the top flight of
the four major European leagues.
This relatively weak pool of top-league talent has come into
particularly sharp focus ahead of the Socceroos’ first game against
Group C favourites France. Putting aside France’s chosen squad of
23, the estimated market value of the next 11 French players
omitted from this selection (~A$500m) is more than six times that
of the entire 26-man Australian squad. This mismatch in quality, the
6-0 drubbing France dished out at the last meeting in 2013, and the
fact that Australia has not won away from home in 10 games, all
underscore the enormity of the challenge at hand.
A roadmap to World Cup glory
For Socceroos fans, perhaps a little Dutch courage is in order? Enter
stage left: Australia’s new international super-coach Bert van Marwijk.
With just a few pre-tournament practice games to work with, the
Dutchman promptly observed that “maybe we don’t have the best
players…. but we can have the best team”. The best team? Strewth!
You beauty! Socceroos fans will certainly settle for that.
Australia looks great value to win the World Cup in Russia, at odds
of 500/1. Along the way, that scenario would almost certainly
involve Australia’s 38-year-old talisman striker Tim Cahill scoring in a
fourth consecutive World Cup – and becoming only the fourth
player to do so. A triumph in Russia would also surely see younger
stars unearthed – including the 19-year-old Daniel Arzani, who is
poised to become the youngest Socceroo to play at a World Cup.
And, if Australia is to raise the World Cup trophy in Moscow, it will
be in large part because the team continues to display the fighting
spirit for which it is renowned and much loved at home. (More than
a little luck and a few forfeits along the way would also help.)
World (economic expansion) Champions
While the Socceroos’ defence has at times leaked goals with the
predictability of a hedge fund looking to ‘short’ an Australian bank,
the broader economy has proven far more resolute. Now
approaching 27 years without a technical recession, if there was a
World Cup for the longevity of economic expansions Australia
would be reigning Champions. Successfully navigating both the
Asian and Global Financial Crises was impressive, but arguably
Australia’s greatest achievement has been the relatively orderly
adjustment over recent years as the mining super-cycle unwound.
Australia’s economic resilience reflects many factors – including
effective monetary/fiscal policy and earlier reforms to remove trade
barriers and ensure flexibility in labour, capital and foreign exchange
markets. Strong population growth and leverage to China’s
economic resurgence has also helped enormously, and there has
been a good dose of luck along the way.
Can Australia’s record economic run continue? The current cyclical
backdrop is reassuring – with surveyed business conditions at
record highs, robust jobs growth, easy financial conditions and
improving public finances. Even so, subdued wage inflation
contrasts somewhat with the experience of those French football
stars, economic reform has stalled and Australian households are
also ‘World Champions’ when it comes to levels of indebtedness.
Overall, these challenges are material but they appear more
manageable than those overcome in recent years. Ahead, we see
more ‘upside down-under’, even if it may be wishful thinking for
this economic outperformance to translate to the football pitch in
Russia.
Andrew Boak
Australia
Statistics for Australia
Source: , FIFA Public Website
Odds: 500/1 World Ranking: 40
Date Venue Against Local Time
16-Jun Kazan Arena France 13:00
21-Jun Samara Arena Denmark 16:00
26-Jun Fisht Stadium Peru 17:00
Previous Appearances: 4
Host Year Outcome
Germany 1974 Round 1
Germany 2006 Round of 16
South Africa 2010 Round 1
Brazil 2014 Round 1
Previous World Cup Results
Games Played 13
Won 2
Drawn 3
Lost 8
Goals Scored 11
Goals Against 26
Yellow Cards 24
Red Cards 4
1st Round Match Schedule
Won Drawn Lost
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Crunch time for the ‘golden’ generation
It is crunch time for Belgium’s ‘golden’ soccer generation. In a very
easy campaign, Belgium became the first European country to
qualify for the 2018 World Cup and climbed to third position in the
FIFA ranking. With many of its star players reaching peak age, it is
now time to reap the rewards.
The talent of the current squad is remarkable for a country with a
population of roughly million, judging by the players’ market
values. The team has quality in every department, starting with
Chelsea ‘goalie’ Thibaut Courtois. The defence is led by
Manchester City’s three-time Premier League winning captain
Vincent Kompany in the centre, and Tottenham’s Jan Vertonghen
and Tobias Alderweireld as experienced backs. The mid-field has
plenty of attacking potential, with dribble wonders Eden Hazard and
Moussa Dembele and assist king Kevin De Bruyne. Finally, the team
can count on Manchester United’s Romelu Lukaku and Napoli’s
Dries Mertens as prolific strikers.
So far, the performance of the ‘golden’ generation in the big
tournaments has been well below potential. Both at the 2014 World
Cup and the 2016 Euro Cup, Belgium lost in the quarterfinals,
against Argentina and Wales respectively. The 2014 and 2016
losses were largely blamed on tactical weakness, defenders’
injuries and fragility in the defensive mid-field. It is now time for the
Red Devils to show progress on these three fronts. While new
Spanish coach Roberto Martínez and his assistant Thierry Henry are
arguably more able tacticians than their predecessor Marc Wilmots,
Martínez remains untested in official games against major soccer
nations. And while the charismatic leader Vincent Kompany and
Barcelona’s Thomas Vermaelen are likely to start the tournament fit,
injuries remain a key risk for these ‘Men of Glass’. Finally, the
defensive mid-field remains the weakest spot. In not selecting
Roma mid-fielder Radja Nainggolan, Martínez triggered a wave of
national protest. The omission of the only Belgian from the
Champions League semi-finals is a mystery from a pure soccer
Martínez may want to prioritise the team culture,
although many analysts see the omission as a vote of confidence in
the coach’s preferred defensive midfielder Axel Witsel, who lacks
Radja’s speed of ball circulation and who snubbed a Juventus move
for a lucrative transfer to China.
Belgium’s improving footballing performance since 2014 has
echoed similar trends in the economy. As a small open economy
(exporting almost ¾ of its production abroad), Belgium has
benefited from the gradual global recovery and an undervalued
Euro. Its close link to the German economy has also helped
maintain robust above-trend growth rates amid reduced volatility in
this recent period. The IMF forecasts %yoy real GDP growth in
2018, implying that the economy is now operating at full capacity.
In economy policy as in football, Belgium has demonstrated an
ability to manage diversity appropriately. The current centre-right
coalition government (since 2014) includes the Flemish separatist
party, the largest in the country. For now, the party has put aside its
main policy goal of independence to agree with its coalition partners
on a reformist agenda focused on the labour market, immigration,
tax reform and, more recently, the pension system.
In principle, Belgium should top Group G—which includes England,
Panama and Tunisia—but the rejuvenated English squad is also
highly talented and knows many of the Belgian players from the
Premier League. If Belgium survives the Group stage, it will face the
winner or runner-up from Group H (Poland, Senegal, Colombia and
Japan) in the Round of 16. Belgium’s biggest hurdle may well be
the Quarter-finals, where it would likely face Germany or Brazil. In
our view, the Red Devils’ prospects therefore look quite bimodal.
While the base case is a third consecutive loss for the ‘golden’
generation in the Quarter-finals, a victory in the last 8 could well
lead to Belgium’s first World Cup tournament win.
As is the case in economics, short-term euphoria after an
outstanding performance could pose the risk of complacency.
Tensions between the North and South have not really gone away,
while the longer-run fiscal outlook remains challenging, with a debt-
to-GDP ratio around 100% and large unfunded pension liabilities.
Although a Belgian victory would temporarily support national unity,
there is a risk that the economic and political challenges would
regain the upper hand fairly quickly.
Alain Durré and Daan Struyven
1Technically, Liverpool’s second goalkeeper, Simon Mignolet, also reached the
Champions League final and some supporters wondered how the final against
Real Madrid would have turned out with Mignolet in goal.
Belgium
Statistics for Belgium
Source: , FIFA Public Website
Odds: 10/1 World Ranking: 3
Date Venue Against Local Time
18-Jun Fisht Stadium Panama 18:00
23-Jun Spartak Stadium Tunisia 15:00
28-Jun Kaliningrad Stadium England 20:00
Previous Appearances: 12
Host Year Outcome
Uruguay 1930 Round 1
Italy 1934 Round 1
France 1938 Round 1
Switzerland 1954 Round 1
Mexico 1970 Round 1
Spain 1982 Round of 16
Mexico 1986 Fourth place
Italy 1990 Round of 16
USA 1994 Round of 16
France 1998 Round 1
Korea/Japan 2002 Round of 16
Brazil 2014 Quarter-finals
Previous World Cup Results
Games Played 41
Won 14
Drawn 9
Lost 18
Goals Scored 52
Goals Against 66
Yellow Cards 36
Red Cards 3
1st Round Match Schedule
Won Drawn Lost
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The 2018 World Cup
Brazil qualified easily for the 2018 World Cup and is currently in 2nd
place in the FIFA World Ranking. The world-class talent and depth
of its roster puts Brazil among the favourites to win the Cup (for a
record 6th time). Brazil is drawn with Switzerland, Costa Rica and
Serbia in Group E, which is perceived to be a relatively
unchallenging group. It will begin its World Cup campaign on June
17 against the highest-ranking team in the group, Switzerland
(currently #6 in the FIFA World Ranking) and the entire country
expects nothing less than a convincing victory from the national
team to set the tone for the tournament.
The team is managed by ‘Tite’, who led the team to an impressive 9
victories and 2 ties in the 11 games he coached during the South
America qualifying round, easily topped by Brazil. Under Tite the
team has displayed a fast and entertaining attack-minded game
showing a good balance between youth and experience. The young
forward line is led by ‘Super-star’ striker Neymar who is expected to
dazzle with his skillful dribbling and pinpoint passing accuracy,
supported by a cast of other top-form internationally experienced
players such as Philippe Coutinho, Roberto Firmino and Gabriel
Jesus. At the back, the team is likely to be anchored by veterans
Miranda, Marcelo and Thiago Silva. Overall, this is a well-balanced
collectively strong team that is not as overly dependent on Neymar
as in 2014. Brazil’s fans will be hoping the team’s performance will
help dull the memory of the 2014 tournament, which saw a semi-
final 7-1 home loss to Germany and fourth-place overall finish.
Football in Brazil
Perhaps no two other single words are as closely associated in the
sporting world as ‘football’ and ‘Brazil’. Alongside carnival, football is
deeply imbedded in the culture and is the ultimate national passion.
Brazil is the most successful football team in the history of the
World Cup, and its top footballers – Pelé (the ‘King’; considered by
many experts and fans as the best player of all time), Zico, Rivelino,
Cafu, Garrincha and Ronaldo, to name just a few – are national
legends and revered icons. Brazil is also the only national team to
have participated in all 21 World Cups (including 2018) and the
Seleção Canarinha (‘little canaries’) has lifted the trophy in three
different continents. The team has won the World Cup a record five
times (Sweden 1958, Chile 1962, Mexico 1970, USA 1994 and
Korea/Japan 2002), finished in second place twice (1950 and 1998)
and took the last spot on the podium on another two occasions
(1938 and 1978). It has also won the FIFA U-20 World Cup five
times, the FIFA U-17 World Cup three times and the FIFA
Confederations Cup four times. In 2016 Brazil finally added the only
major international title that had eluded its illustrious soccer history:
a men’s gold medal in the Summer Olympics.
The state of the economy and the nation
The economy is in much better shape than during the 2014 when
Brazil hosted the tournament. Inflation and the policy rate are
tracking at historically low levels and the current account imbalance
has mostly been corrected, but growth has been uninspiring and
the unemployment rate remains in double digits. A deep,
permanent, structural fiscal adjustment remains front-and-centre on
the policy agenda. Failure to deliver tangible and credible measures
to reduce the fiscal deficit and stabilise the debt dynamics could
jeopardise macroeconomic rebalancing, and put the recovery at risk.
Brazilians will go to the polls soon after the World Cup ends.
Presidential and General Elections will be held on October 7, 2018.
These have limited the authorities’ capacity to pursue a more
assertive fiscal consolidation strategy.
The new administration will need to address a number of remaining
domestic macro imbalances (a weak fiscal picture at the flow and
stock levels), and embrace investment- and savings-friendly, pro-
growth policies. Some of the issues that continue to handicap
economic performance are structural rather than cyclical (., low
investment, even lower domestic savings and low productivity and,
hence, low potential growth). Therefore, beyond strengthening the
policy mix, Brazil would benefit from a deep structural reform drive
(., fiscal spending, tax system, social security, opening to foreign
trade, etc.) to raise domestic savings and investment rates, boost
overall productivity and elevate potential GDP.
Alberto M Ramos
Brazil
Statistics for Brazil
Source: , FIFA Public Website
Odds: 9/2 World Ranking: 2
Date Venue Against Local Time
17-Jun Rostov Arena Switzerland 21:00
22-Jun Saint Petersburg Stadium Costa Rica 15:00
27-Jun Spartak Stadium Brazil 21:00
Previous Appearances: 20
Host Year Outcome
Uruguay 1930 Round 1
Italy 1934 Round 1
France 1938 Third place
Brazil 1950 Second place
Switzerland 1954 Quarter-finals
Sweden 1958 Winners
Chile 1962 Winners
England 1966 Round 1
Mexico 1970 Winners
Germany 1974 Fourth place
Argentina 1978 Third place
Spain 1982 Round of 16
Mexico 1986 Quarter-finals
Italy 1990 Round of 16
USA 1994 Winners
France 1998 Runners-up
Korea/Japan 2002 Winners
Germany 2006 Quarter-finals
South Africa 2010 Quarter-finals
Brazil 2014 Fourth place
Previous World Cup Results
Games Played 104
Won 70
Drawn 17
Lost 17
Goals Scored 221
Goals Against 102
Yellow Cards 97
Red Cards 11
1st Round Match Schedule
Won Drawn Lost
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Football in Colombia
The country returns to the World Cup after their best performance
ever, having reached the Quarter-finals at Brazil 2014 in their first
appearance after a 16-year drought. In that historic campaign, Los
Cafeteros (‘The Coffee Growers’) comfortably advanced through the
Group stage, winning all three matches, then proceeding to beat
Uruguay in the Round of 16, only to be stopped by the host nation
in a close 1-2 loss.
Colombians had to wait until the last round of the CONMEBOL
qualifiers to celebrate their 6th ticket to the World Cup after
surprisingly blowing a lead against Paraguay in the previous game,
suffering two goals in the last four minutes. The subsequent 1-1 tie
against Peru with a goal by star player James Rodríguez guaranteed
a spot for Colombia. Rodríguez came into prominence after a
dazzling display in Brazil 2014. The then-22-year-old midfielder led
the World Cup with 6 goals, earning him the Golden Boot and the
Puskás Award for the best goal of 2014, and was elected to the
Cup’s All Star Team. After a lacklustre third season with Real
Madrid, Rodríguez seems to have rediscovered his top form at
Bayern Munich.
Besides Rodríguez, coach José Pekerman will count on the skills of
Radamel ‘El Tigre’ Falcao, Juan Cuadrado and veteran goalkeeper
David Ospina. Falcao’s debut at the World Cup comes after a
serious knee injury prevented the striker from representing his
country in 2014 at the peak of his career, being considered at the
time one of the best players in the world. An experienced mid-
fielder playing in Europe for the past nine seasons, Cuadrado is
known for his speed and dribbling skills, having stood out with the
most assists in Brazil 2014.
Building on the successful 2014 campaign, Colombia is a favourite
to advance through Group H. Although Poland is the top-ranked
nation in the group (ranked 10th in the FIFA World Ranking), Russia
2018 marks the first appearance in 12 years for the Baltic country,
which last survived the Group stage in 1986. Japan currently ranks
at a lowly 60th place, its worst position in 25 years, and is the clear
underdog. Finally, Senegal (ranked 28th) is performing in only its
second World Cup, though observers note that the African nation
reached the Quarter-finals in its 2002 debut and should not be
underestimated.
The state of the economy
Over the past years, the economy has dealt with the adverse
effects of a severe terms of trade shock, comprised of high current
account and fiscal deficits, above-target inflation and subdued
economic growth. But that did not seem to alarm foreign investors,
who increasingly sought Colombian assets, doubling their share in
local government debt since the 2014 World Cup and overtaking
local pension funds as the largest debt holders.
More recently, the macro picture has improved on the back of
higher oil prices and moderating inflation, which allowed the central
bank to ease monetary policy considerably and support domestic
demand. The latest data suggest the business cycle has reached a
turning point, though we expect the economic recovery to be very
gradual, with real GDP growth likely to reach % in 2018, up from
a disappointing % in the previous year.
The state of the nation
Colombians headed to the polls on May 27 for the first round of the
presidential election, which has been marked by the country’s social
and political division exposed by the 2016 referendum on a peace
agreement with the FARC guerrilla movement. The election result
was broadly in line with what the latest intention polls suggested,
with modest opposing surprises.
On the one hand, centre-right candidate Iván Duque (Centro
Democrático), who defends the revision of some controversial
aspects of the peace process, secured a better-than-expected 14-
point lead over leftist Gustavo Petro (Movimiento Progresista). On
the other hand, left and centre-left parties combined exceeded the
votes obtained by centre-right candidates, suggesting Mr. Petro
could perform better than anticipated in the second round on June
17. However, centre-left candidate Sergio Fajardo (Coalición
Colombia), who narrowly missed a spot in the second round,
declared he would not support any candidate, which favours Mr.
Duque in his bid for the presidency.
Paulo Mateus
Colombia
Statistics for Colombia
Source: , FIFA Public Website
Odds: 33/1 World Ranking: 16
Date Venue Against Local Time
19-Jun Mordovia Arena Japan 15:00
24-Jun Kazan Arena Poland 21:00
28-Jun Samara Arena Senegal 18:00
Previous Appearances: 5
Host Year Outcome
Chile 1962 Round 1
Italy 1990 Round of 16
USA 1994 Round 1
France 1998 Round 1
Brazil 2014 Quarter-finals
Previous World Cup Results
Games Played 18
Won 7
Drawn 2
Lost 9
Goals Scored 26
Goals Against 27
Yellow Cards 22
Red Cards 0
1st Round Match Schedule
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The 2018 World Cup
Costa Rica is becoming somewhat of a regular representative of the
CONCACAF region in the World Cup. This year marks its fourth
appearance in the last five cups, and fifth overall. Mexico and the
United States are the other CONCACAF usuals but, notably, with
the USA failing to qualify this year, the Costa Ricans will be joined
by fellow Central Americans, Panama, their neighbours to the south.
The Ticos (colloquial term in Central America for a native of Costa
Rica), who rarely make it out of the Group stage, will be looking to
improve on their 2014 ‘Cinderella’ Quarter-final appearance, where
they lost a heartbreaker to the Netherlands in a penalty shootout (4
– 3). In order to do so, they face an uphill battle. The Ticos will have
to face juggernaut Brazil in the Group stage, as well as solid
contenders Serbia and Switzerland. Most pundits pick Brazil to
come out 1 and Serbia to come out 2 from Group E. Should luck
favour the Costa Rican squad and they manage to get out of the
Group stage, they would very likely face the highly ranked German
squad in the Round of 16. Suffice it to say, the Ticos have their
work cut out for them.
On the field, the team will be captained by Bryan Ruiz, a seasoned
playmaker and forward with experience in multiple European
leagues, including the EPL. The team is anchored by their star
goalkeeper, Keylor Navas, the current starting keeper for Real
Madrid, who was in goal during their 2014 World Cup run to the
Quarter-finals. During that tournament, he ceded only two goals in
510 minutes of play across five contests. The other players to
watch will be strikers Joel Campbell and Marco Ureña, who play for
Arsenal and Los Angeles FC, respectively, and were leaders on the
team four years ago. The Costa Rican defence will have its hands
full facing such top quality forwards as Neymar (Brazil) and Shaqiri
(Switzerland). The Ticos’ most likely path to escape the Group stage
would be a win over Switzerland, a draw with Serbia and a loss to
Brazil, and then hope to advance based on goal differential.
Currently, our model has Cost Rica finishing last in group E.
Economics and politics
Costa Rica boasts a fairly well-diversified economy centred around
agricultural products such as coffee, bananas, pineapple and sugar,
as well as eco-tourism, high-value-added manufacturing and IT
services. Costa Rica is one of the few countries in the world that
does not have a standing army, allowing it to spend more on
education per capita than many other developing nations. More than
300 global companies have set up shop in Costa Rica, including
several large multinationals, including Intel, Amazon and IBM. Costa
Rica is by far one of the most stable and prosperous of the Central
American nations, boasting a per capita GDP of $17,200 compared
with its neighbours to the north, Nicaragua and Honduras, with per
capita GDP of just $5,800 and $5,500, respectively.
In April 2018 Carlos Alvarado Quesada of the centre-left Citizen
Action Party (PAC) won the presidential election, taking over from
his predecessor of the same party. This continuation of rule by the
PAC should assure a continuation of policies that have led to
average real GDP growth of % from 2010 to 2017. President
Quesada, 38, is a former Minister of Labour whose main challenge
and priority will be reducing the fiscal deficit, which climbed above
6% of GDP in 2017. In August of last year the government faced
somewhat of a liquidity crisis to meet its debt obligations and earlier
this year Fitch put the country’s debt, which is already rated in HY
territory, on Outlook Negative. Mr. Quesada has proposed raising
VAT as well as making sure taxes are collected from companies in
the sharing economy, such as Uber and Airbnb, as ways to close
the deficit.
Spencer Rogers
Costa Rica
Statistics for Costa Rica
Source: , FIFA Public Website
Odds: 250/1 World Ranking: 25
Date Venue Against Local Time
17-Jun Samara Arena Serbia 16:00
22-Jun Saint Petersburg Stadium Brazil 15:00
27-Jun Nizhny Novgorod Stadium Switzerland 21:00
Previous Appearances: 4
Host Year Outcome
Italy 1990 Round of 16
Korea/Japan 2002 Round 1
Germany 2006 Round 1
Brazil 2014 Quarter-finals
Previous World Cup Results
Games Played 15
Won 5
Drawn 4
Lost 6
Goals Scored 17
Goals Against 23
Yellow Cards 30
Red Cards 1
1st Round Match Schedule
Won Drawn Lost
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After difficulties qualifying, it only gets harder from here
Croatia has never been able to equal the success of their first World
Cup campaign, when the ‘Golden Generation’ took the team to third
place in the 1998 World Cup. After coming third in the Group stage
in Brazil, and failing to qualify for the 2010 tournament, in Russia the
team will be hoping to capitalise on the potential implied by their
players.
The road to the World Cup was not straightforward for Croatia.
While they got off to a good start in 2016, winning 3 out of 4 of
their qualifying games, they lost to Iceland away in June 2017.
Following another defeat to Finland, their head coach Ante Cacic
was replaced by under-21s coach Zlatko Dalic (mirroring their
previous World Cup run – which does not bode well). After a must-
win victory against Ukraine, they once again found themselves in
the play-offs but were able to capitalise on their home fixture,
comfortably beating Greece 4-1 on aggregate.
At the final itself, things will only get more difficult, as Croatia find
themselves against Argentina, Iceland and Nigeria in Group D. Their
opening game will be against a challenging Nigerian team in
Kaliningrad on June 16, followed by a difficult fixture in Nizhny
Novgorod against Argentina on June 21, and finally playing Iceland
in Rostov-on-Don on June 26. Argentina will, of course, be
favourites to qualify in first place in the group. Nigeria and Iceland
will also be difficult fixtures. Nigeria has reached the Round of 16 in
the tournament on three occasions, most notably in Brazil where
they finished the Group stage in second place behind Argentina.
And, despite this being Iceland’s first World Cup, perhaps this team
represent an even larger threat – they are in form, qualifying in first
place for the World Cup ahead of Croatia themselves, and finishing
above eventual winners Portugal in the Group stage of Euro 2016.
The current generation’s lack of success is surprising – at least on
paper – as their squad features a number of world-class players. In
particular, ‘El Clásico’ rivals Ivan Rakitic and captain Luka Modric
form the core of the team in mid-field, with Internazionale and
Juventus stars Ivan Perisic and Mario Mandzukic their main goal-
scoring threats. Dejan Lovren will be propping up the defence
without the help of Vedran Corluka, who is injured with a torn
Achilles. The largest hurdle to overcome will be the pressure of the
team’s own expectations – most of their starting 11 are over the
age of 29, and will view this year as their last realistic chance of
success. This will be exacerbated by distractions off the pitch, as
there are ongoing difficulties between the national football
association, the Croatian media, the players and its fans (Croatia
played a number of its qualifying games behind closed doors as a
punishment for fan behaviour at previous games).
Qualifying second in Group D implies Croatia would likely face
France in the Round of 16. The path to the final 8 will not be
smooth.
Recovery, finally, for the Croatian economy
As was the case for much of Central and Eastern Europe pre-2008,
Croatia was overly reliant on external financing, with a high
concentration of foreign-owned banks and a large stock of hard-
currency debt liabilities.
The global financial crisis (GFC) precipitated a severe recession in
Croatia, and subsequent private sector deleveraging, as well as
significant fiscal consolidation, prolonged the process of recovery. In
2013 Croatia joined the EU, and it has since been benefited from
both structural funds and the Euro area’s own recovery in growth.
While the football team has proved inconsistent over the past three
years, the economy appears to have taken a decisive positive step
in the past couple of years. Following 6 years of recession after the
GFC, the economy has recorded positive growth for three
successive years (expanding by +%yoy in 2017). The IMF
expects growth to remain at a similar level this year, before slowly
declining in the outer years of its forecast. In real terms, this would
imply Croatia returns to its pre-crisis output level in 2019.
Like in much of Europe, inflation has remained relatively subdued in
Croatia and monetary policy accommodative after the crisis. In
keeping with its medium-term objective under the EU’s stability and
growth pact, the government has been tightening fiscal policy. The
budget is now close to balanced and the high public debt is
beginning to be paid off. However, the road to sustained growth will
be dependent on structural reform, in particular labour market
reforms. Labour force participation in Croatia is one of the lowest
within the EU, and structural unemployment remains high.
The challenge for the Croatian economy will be to transform current
momentum into sustainable medium- and long-term growth. The
challenge for Dalic and his team will be to make it out of the Group
stage.
Loughlan O’Doherty* and Kevin Daly
*Loughlan is an intern with the CEEMEA Economics team.
Croatia
Statistics for Croatia
Source: , FIFA Public Website
Odds: 33/1 World Ranking: 18
Date Venue Against Local Time
16-Jun Kaliningrad Stadium Nigeria 21:00
21-Jun Nizhny Novgorod Stadium Argentina 21:00
26-Jun Rostov Arena Iceland 21:00
Previous Appearances: 4
Host Year Outcome
France 1998 Third place
Korea/Japan 2002 Round 1
Germany 2006 Round 1
Brazil 2014 Round 1
Previous World Cup Results
Games Played 16
Won 7
Drawn 2
Lost 7
Goals Scored 21
Goals Against 17
Yellow Cards 33
Red Cards 4
1st Round Match Schedule
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Return to ‘Danish Dynamite’ or damp squib?
Denmark made its first appearance in the World Cup in 1986, where
it won all its Group stage matches, including beating finalist
Germany, impressing the world of football with its display of
‘Danish Dynamite’. Since then, Denmark has been a semi-regular
World Cup team, qualifying roughly every other time. Its best
performance was to reach the Quarter-finals in France in 1998,
when it lost to finalist Brazil. The team failed to move beyond the
Group stage in its latest World Cup appearance in 2010 – its worst
World Cup result. Denmark’s best result was to win the European
Championship in 1992.
Denmark’s football reputation is one of fast-paced attacking football,
from the explosive 1986 team to the Dutch-inspired passing game
under legendary coach (and player) Morten Olsen from 2000 to
2015. Denmark’s game has turned more direct and adaptive under
new coach Åge Hareide. Following an uneven start to the qualifying
campaign for the 2018 World Cup, losing to Poland and
Montenegro, the Danish team found its style, scoring an average of
goals in the last 7 games, including beating group winners
Poland 4-0. Placed second in its qualifying group, Denmark faced
Ireland in the two-match play-off for a spot in the World Cup.
Displaying superb attacking play, Denmark beat Ireland 5-1 in Dublin
to qualify.
Denmark faces initial Group stage matches against France, Australia
and Peru in the 2018 World Cup. The team’s form is good and it is
undefeated since the initial missteps of the early qualifying
campaign in 2016. The key player is Christian Eriksen from
Tottenham Hotspurs. From a position on the attacking mid-field,
Eriksen has become the key player under Hareide, scoring 12 goals
in 18 matches (after only 6 goals in 57 matches under Coach Olsen)
and directing the Danish offensive play. Denmark’s prospects
crucially depend on Eriksen’s form. Denmark’s chances of finishing
second after France in the initial Group stage should be good. In the
knock-out competition, anything can happen: an Eriksen in form
and a return of ‘Danish Dynamite’ could bring the team to the
Quarter-finals (matching its performance from 1998) or even
beyond. But with high reliance on a single key player, the risks
are high. Denmark’s 2018 World Cup campaign could end up a
damp squib.
The economy – the drag from a weak housing market
Like its football performance, the Danish economy suffered from
2008 until recently. The dry spell of Danish football between 2008
and 2016 occurred alongside a dismal GDP performance. Economic
activity fell sharply during the financial crisis and the recovery was
very weak. GDP returned to its pre-crisis level only in late 2014.
Relative to its Scandinavian peers, the Danish economy clearly
underperformed.
The root cause of the weakness in Danish GDP was the sharp
correction in house prices following the financial crisis. Real house
prices fell close to 30% between late 2007 and early 2012, and are
still around 20% below their 2007 peak. The drop in the value of
housing led households to deleverage, and real household
consumption fell 5%-6% in 2008 and was flat for half a decade.
Relative to its Scandinavian peers, Danish household consumption
has underperformed since 2008 by around 15%.
The improving performance of Danish football has been echoed in
the economy, even if the economic rebound has been slower, less
impressive and non-explosive. On the back of improving private
consumption, investments and exports, Danish GDP growth has
returned to around 2%. We expect similar growth in the next
couple of years.
Lasse Holboell W. Nielsen
Denmark
Household consumption has underperformed Scandi peers
75
80
85
90
95
100
105
08 09 10 11 12 13 14 15 16 17
Index, 2008 Q1 = 100 Danish real houshold consumption relative to the average of Swedish
and Norwegian real houshold consumptio
Source: Statistics Denmark, Statistics Sweden and Statistics Norway
Statistics for Denmark
Source: , FIFA Public Website
Odds: 80/1 World Ranking: 12
Date Venue Against Local Time
16-Jun Mordovia Arena Peru 19:00
21-Jun Samara Arena Australia 16:00
26-Jun Luzhniki Stadium France 17:00
Previous Appearances: 4
Host Year Outcome
Mexico 1986 Round of 16
France 1998 Quarter-finals
Korea/Japan 2002 Round of 16
South Africa 2010 Round 1
Previous World Cup Results
Games Played 16
Won 8
Drawn 2
Lost 6
Goals Scored 27
Goals Against 24
Yellow Cards 31
Red Cards 3
1st Round Match Schedule
Won Drawn Lost
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Egypt is the most successful national football team in Africa, having
won the Africa Cup of Nations a record seven times. But it has
found it surprisingly difficult to qualify for the FIFA World Cup. Egypt
will be making only its third appearance at the World Cup in 2018
and its first in 28 years.
Salah’s shoulder
Qualification was a nerve-jangling affair for the Pharaohs in 2017 as
well, finally requiring an injury-time penalty against Congo, scored
by star-striker and talisman Mohamed Salah. And therein lies
Egypt’s greatest strength, as well as its biggest weakness. The
squad is coached by the former Valencia coach, Argentine Hector
Cuper, and endowed with a number of experienced professionals,
starting with 45-year-old goalkeeper Essam El Hadary, who could
become the oldest player ever at the World Cup, Aston Villa’s
consistent wingback El Mohamady, and a capable mid-field of
Arsenal’s Mohamed El Neny and Stoke City’s Ramadan Sobhi. But
without question, the team’s fortunes have been heavily reliant on
the goal-scoring prowess of Liverpool forward, Mohamed Salah.
Salah has enjoyed a prolific 2017-2018 season with Liverpool, with
his 44-goal haul in all competitions (never bettered in a single
Premier League season) eliciting justifiable comparisons with
Cristiano Ronaldo and especially fellow left-footed forward Lionel
Messi. So his shoulder injury, early in the showpiece Champions
League final between Liverpool and Real Madrid in late May was all
the more pivotal. From here, ‘Salah’s shoulder’ is to Egypt what
‘Beckham’s metatarsal’ was to England ahead of the 2002 World
Cup, when everyone from the sage at the local mosque to the
President will have strong views on shoulder injuries, recovery
times and his ability to star in Russia.
While Salah himself is optimistic about his prospects, without his
goals, the team will need the solidity of the Aswan Dam at the back
and the cunning of a cat further forward to get out of a tough but
not impossible Group A, which includes the hosts Russia, Saudi
Arabia and Uruguay.
An economic recovery to match a footballing renaissance
Both Egyptian football and its economy are recovering after the
period between 2011 and 2016: the political uncertainty that
followed the 2011 revolution took a heavy toll on Egypt’s economy
and its football. After a riot at a football game between clubs Al Ahly
and Al Masry in February 2012, the domestic league was
suspended for a couple of years. Over that period, the national team
failed to qualify for three successive editions of the Africa Cup of
Nations, finally making it back to the competition in 2017, when it
reached the finals only to lose against Cameroon.
Political tensions also brought to light the underlying fragility of
Egypt’s economy. Following a period of declining growth, falling
tourism receipts and a widening current account deficit, in
November 2016 the Egyptian authorities took a number of decisive
steps to address the economic crisis. The currency regime was
liberalised, with a deep devaluation of the official exchange rate; a
three-year fiscal consolidation programme was launched to reduce
high budget deficits; monetary policy was tightened to contain
inflation pressures; and reforms were launched to improve the
business environment.
While there are still significant risks of delivery, so far the
programme has been surprisingly successful: the current account
deficit is gradually correcting alongside inflation and business, and
investor confidence has been restored. Indeed, one of the key risks
is that Egypt may be a victim of its own success. The combination
of high Treasury bill yields and an undervalued exchange rate has
attracted plenty of foreign investors into the local bill market. There
is a risk that if the recent market volatility extends, Egypt could be
hard hit simply because that is where a lot of the investment is.
On the plus side, the upturn in the fortunes of Egypt’s football
suggests that there is more room for the economic revival to
extend. The exhibit, which is clearer than your average hieroglyphic
script, suggests that the peak in tourist arrivals coincided with
Egypt’s best recent football ranking in 2010, and the recent
recovery may therefore be a good omen.
Kamakshya Trivedi
Egypt
Football’s coming home, tourists are coming back
Source: Haver, FIFA Public Website
Statistics for Egypt
Source: , FIFA Public Website
0
2000
4000
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12000
14000
16000
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FIFA Football Ranking:
Egypt (LHS)
Egypt Tourist Arrivals
(NSA, Thousands)
Odds: 150/1 World Ranking: 46
Date Venue Against Local Time
15-Jun Ekaterinburg Arena Uruguay 17:00
19-Jun Saint Petersburg Stadium Russia 21:00
25-Jun Volgograd Arena Saudi Arabia 17:00
Previous Appearances: 2
Host Year Outcome
Italy 1934 Round 1
Italy 1990 Round 1
Previous World Cup Results
Games Played 4
Won 0
Drawn 2
Lost 2
Goals Scored 3
Goals Against 6
Yellow Cards 4
Red Cards 0
1st Round Match Schedule
Won Drawn Lost
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Taking back control
Of the ‘Leave’ votes cast in the UK’s referendum on EU
membership in 2016, were cast in England. If the Brexit
vote harked back to an era when Britannia ruled the waves, it pales
in comparison with England’s collective sense of nostalgia for the
Jules Rimet. The question of Europe has brought 30 years of
internal conflict in the Conservative Party. But that seems trivial
compared with 50 years of national mourning over football’s fall
from grace. A PM’s combative speech in Bruges in 1988 cautioned
that the EU would erode “national pride in one’s own country”.
Sport has often proven the antidote. Readers of a national
newspaper recently ranked England’s 1966 World Cup victory
second only to VE Day among the “top ten dates in modern British
history”.
If Brexit means Brexit, football means everything. It is little wonder,
then, that the median English voter can name more Premier League
strikers than sitting MEPs. Net inward migration from the Continent
played a role in the Brexit debate, but not even UKIP argued that
stricter EU immigration rules should extend to the FA Cup. After all,
the impact assessments are definitive. Were it not for freedom of
movement, half-a-dozen former Highbury heroes – Nicolas Anelka
and Cesc Fàbregas among them – would have failed to qualify for a
work permit. For the typical football fan, Dele Alli’s flair is
irresistible, while a politician’s swagger is irreconcilable. For the
typical school-leaver, the three lions do not evoke images of
ministers lunching at Chequers. Footballers reign supreme.
Red lines
If Gareth Southgate’s ‘Barmy Army’ is to avoid the fate of Theresa
May’s Brexit Sub-Committee this summer, three red lines must be
enforced as England negotiates the rounds in Russia.
First, strong and stable leadership is a pre-requisite. More than half
of the current England squad were not yet born when the
Maastricht Treaty was signed. Like the current Prime Minister, the
current England manager knows that the task is demanding.
Second, no result is better than a bad result. Uruguay won the 1950
World Cup having notched up only one convincing victory en route.
In the group stages, eking out an early draw has often proven more
profitable than a gamble that ends in ruin.
Third, one cannot have one’s cake and eat it too. Harry Kane is a
prodigious talent, with a striker’s typical reputation for selfishness.
He must harness his individual ability to serve the common good – if
only to show politicians that to lead can sometimes be to pass.
England expects
When it comes to England’s passage through international
competitions, history suggests that transition is never smooth. A
disorderly exit would risk financial stability at a time when consumer
credit is growing at double digit rates and saving ratios have
reached all-time lows. A snag at the June summit would hit
consumer confidence at a time when Sterling’s post-referendum
depreciation has squeezed households’ disposable income.
Insufficient progress over the summer would dent productivity at a
time when output per worker has had its worst decade for more
than 150 years. Taking back control on the world stage would help
restore some semblance of momentum at a time when growth has
tumbled from the top of the G7 league table to the bottom.
Ambitious managed divergence between England (scrappy
underdogs) and Germany (firm favourites) would facilitate cross-
border trade at a time when international relations are already
feeling the strain.
In the early stages, stamina is paramount: nothing is agreed until
everything is agreed. When it comes to the crunch, composure is
essential: a cliff-edge exit would constitute a severe hit to potential
growth, with intergenerational ramifications. In truth, things are
likely to be less glorious than the idealists would have you believe.
This team lacks experience. It may be out of its depth. Things will
look better in 2022. The sunlit uplands are some way away. England
expects. But the rest of the world expects more.
Adrian Paul
England
Statistics for England
Source: , FIFA Public Website
Odds: 14/1 World Ranking: 13
Date Venue Against Local Time
18-Jun Volgograd Arena Tunisia 21:00
24-Jun Nizhny Novgorod Stadium Panama 15:00
28-Jun Kaliningrad Stadium Belgium 20:00
Previous Appearances: 14
Host Year Outcome
Brazil 1950 Round 1
Switzerland 1954 Quarter-finals
Sweden 1958 Round 1
Chile 1962 Quarter-finals
England 1966 Winners
Mexico 1970 Quarter-finals
Spain 1982 Round of 16
Mexico 1986 Quarter-finals
Italy 1990 Fourth place
France 1998 Round of 16
Korea/Japan 2002 Quarter-finals
Germany 2006 Quarter-finals
South Africa 2010 Round of 16
Brazil 2014 Round 1
Previous World Cup Results
Games Played 62
Won 26
Drawn 20
Lost 16
Goals Scored 79
Goals Against 56
Yellow Cards 51
Red Cards 3
1st Round Match Schedule
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En Marche to renewed success
After a stunning sporting feat in the late 1990s (winning 3-0 against
Brazil in the 1998 World Cup final, and 2-1 against Italy in the final of
the 2000 Euro Cup), and notwithstanding a number of coups d’éclat
since (., against the odds, France advanced to the World Cup
final in 2006), the French national football team has gone through a
long period of subdued performance. However, France has enjoyed
renewed success over the past few years.
Likewise, the French economy entered the new millennium in a
relatively strong cyclical economic position, at least relative to its
main European competitor, Germany, which was undergoing
important structural changes. Yet, in the subsequent years, the
performance of the French economy has been hamstrung by a too
slow convergence of national labour and product market standards
towards those established in the more competitive northern Euro
area countries.
Since the last 2014 World Cup, there has been a turning point in
both economics and the national football team.
On the economics front, the Socialist government of President
Hollande initiated a number of reforms, which paved the way in
particular for the pro-reformist agenda currently adopted by the new
government. With the election of President Macron last year,
France’s image in the international arena is more positive, and the
perception of the business environment in France has improved
substantially. Benefiting largely from robust global economic
growth, the French economy has recorded more robust growth
rates since last year, converging progressively towards the Euro
area growth average. After a softening of activity in the first quarter
amid bad weather and strikes, we remain confident about the
resilience of the French economy in the remainder of the year and
next. We continue to forecast above-trend growth in 2018, with real
GDP growth of around %yoy.
This French ability to rebound – usually just as people are becoming
despondent – is equally applicable to the French soccer team, ‘Les
Bleus’, currently managed by Didier Deschamps (formerly team
captain at the 1998 World Cup). As with the economy, a return of
optimism is reflected in this young and dynamic French soccer
team, with many of its players having performed well in the Premier
League. The team has improved its quality in key departments,
starting with Tottenham’s goalkeeper Hugo Lloris. Also, there is
plenty of attacking potential with the improved coordination
between Atlético Madrid’s Antoine Griezmann, PSG’s Kylian
Mbappé, Chelsea’s Olivier Giroud and FC Barcelona’s Ousmane
Dembélé. Other key players, such as Manchester United’s Paul
Pogba in midfield, also look promising.
On paper, France should top Group C—which is shares with
Australia, Denmark and Peru—and then qualify for next stage. If it
does, France will face the winner or runner-up of Group D
(Argentina, Croatia, Iceland and Nigeria) in the Round of 16.
Although France’s biggest hurdle may well be to face Germany or
Brazil in the run-up to the final, we think it has good chance of
reaching the Semi-finals at least. And why not Onwards! to victory
(to paraphrase the political movement initiated by Emmanuel
Macron ahead of the Presidential election).
A repeat of the 1998 performance would no doubt be met with
euphoria and would be a significant boost for French households.
But in economics as in football, the risk exists that short-term
success overlooks long-term challenges. In our view, it is essential
that France pursue the pro-reformist agenda initiated by the
government of President Macron. And maybe an outstanding
performance by the French soccer team would help reduce current
opposition to reforms through increased social cohesion behind
‘Les Bleus’. So, “Allez ‘Les Bleus’!”
Alain Durré and Pierre Vernet
France
Statistics for France
Source: , FIFA Public Website
Odds: 6/1 World Ranking: 7
Date Venue Against Local Time
16-Jun Kazan Arena Australia 13:00
21-Jun Ekaterinburg Arena Peru 20:00
26-Jun Luzhniki Stadium Denmark 17:00
Previous Appearances: 14
Host Year Outcome
Uruguay 1930 Round 1
Italy 1934 Round 1
France 1938 Quarter-finals
Switzerland 1954 Round 1
Sweden 1958 Third place
England 1966 Round 1
Argentina 1978 Round 1
Spain 1982 Fourth place
Mexico 1986 Third place
France 1998 Winners
Korea/Japan 2002 Round 1
Germany 2006 Runners-up
South Africa 2010 Round 1
Brazil 2014 Quarter-finals
Previous World Cup Results
Games Played 59
Won 28
Drawn 12
Lost 19
Goals Scored 106
Goals Against 71
Yellow Cards 56
Red Cards 6
1st Round Match Schedule
Won Drawn Lost
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In the form of champions
Germany cruised to the 2018 World Cup finals, winning all ten of
their qualifying matches. In the process, Germany scored 43 goals,
while conceding only 4. Notwithstanding their loss to Brazil in
March – the first defeat for Die Nationalmannschaft since losing to
hosts France at the semi-final stage of the European championships
back in 2016 – Germany is showing the form of a champion, fittingly
so as the holders of the World Cup following their triumph in Brazil
four years ago.
The German economy is in similar excellent form. After a few
hiccoughs in the first quarter as bad weather, an outbreak of ‘flu and
strikes in the metalworking and public sectors weighed on
economic activity, the fundamental strength of the German
economy is set to reassert itself in the remainder of the year. We
forecast real GDP growth of %yoy in 2018. For a mature
European economy operating at full capacity, that represents the
performance of a champion.
Sustained performance, strong foundations
Over the four years since the last World Cup, Germany has
demonstrated robust, above-trend growth on a consistent basis,
helping to bring unemployment down to very low levels (% on
the internationally comparable ILO measure, below what we see in
the US or UK). Yet despite such low unemployment, inflation
remains stubbornly below the ECB’s 2%pa target, with wage
growth showing only tentative signs of acceleration at this stage.
We attribute the combination of sustained German growth and
weak inflation to two factors: (1) structural reforms implemented in
the early 2000s; and (2) the competitive pressures stemming from
Germany’s exposure to globalisation. The Hartz IV reforms
increased the flexibility and efficiency of the labour market, while
the threat of manufacturing shifting offshore and/or competition
from immigrant workers (especially from central and Eastern
Europe) has disciplined German wage and price setters.
Germany’s recent footballing success has been built on similar
foundations. After ignominiously failing to qualify from the group
stage of the 2000 European championships (coming bottom of a
pool containing Portugal, Romania and England), the German
football authorities undertook a root-and-branch reform of their
coaching, academies and training schemes in the early 2000s. In
parallel (and reflecting wider developments in German society), the
ethnic background of the German team broadened. More leading
German players moved abroad (to play in the Spanish and English
leagues), while foreign players brought new skills and greater
competition to the German Bundesliga. Germany’s hosting of the
2006 World Cup marked a sea-change, with an improved
performance reflecting these innovations ultimately paving the way
to winning the 2014 World Cup in Brazil.
In economics as in football, the risk exists that sustained success
breeds complacency. With trade tensions rising and greater
economic nationalism on the other side of the Atlantic, the external
environment facing the German economy is becoming more
challenging. And, after an extended period of stability, populism
threatens the political status quo at home. Heading off the populist
threat may entail unwinding some of the reforms upon which
German economic outperformance rests.
That said, we remain upbeat on Germany’s economic prospects in
the coming few years. And history tells us it would be unwise to bet
against Germany on the football field. Four World Cups are
testament to both German talent and German organisation.
Huw Pill
Germany
Statistics for Germany
Source: , FIFA Public Website
Odds: 9/2 World Ranking: 1
Date Venue Against Local Time
17-Jun Luzhniki Stadium Mexico 18:00
23-Jun Fisht Stadium Sweden 21:00
27-Jun Kazan Arena Korea Republic 17:00
Previous Appearances: 18
Host Year Outcome
Italy 1934 Third place
France 1938 Round 1
Switzerland 1954 Winners
Sweden 1958 Fourth place
Chile 1962 Quarter-finals
England 1966 Runners-up
Mexico 1970 Third place
Germany 1974 Winners
Argentina 1978 Quarter-finals
Spain 1982 Runners-up
Mexico 1986 Runners-up
Italy 1990 Winners
USA 1994 Quarter-finals
France 1998 Quarter-finals
Korea/Japan 2002 Runners-up
Germany 2006 Third place
South Africa 2010 Third place
Brazil 2014 Winners
Previous World Cup Results
Games Played 106
Won 66
Drawn 20
Lost 20
Goals Scored 224
Goals Against 121
Yellow Cards 110
Red Cards 7
1st Round Match Schedule
Won Drawn Lost
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The 2018 World Cup
After having been frozen out of the FIFA World Cup since its
inception, the tiny island nation of Iceland will make its first
appearance in the tournament this year, entering a challenging
Group D. For Iceland’s national team, making it this far was no small
feat: with a population of just 335,000 or so, it will be the smallest
nation ever to compete at football’s highest level. To put these
numbers in perspective, almost one-third of the nation’s population
could fit comfortably in Barcelona’s Camp Nou stadium—or, in
economic terms, US nonfarm payroll employment increases by
about one Iceland every two months.
But there’s nothing fishy about Iceland’s climb to number 22 on
FIFA’s national team rankings. Both the men’s and women’s
squads have performed at top-tier levels for several years, and the
men’s team famously knocked out England in Euro 2016—
ultimately ending Roy Hodgson’s four-year run as England’s
manager. Leading goal-scorer Gylfi Sigurðsson plays attacking mid-
fielder for Everton—ranked eighth in the Premier League—and has
18 goals in 55 appearances in international competition. He will be
supported on the attack by Alfreð Finnbogason (Augsburg), Birkir
Bjarnason (Aston Villa), and Jóhann Guðmundsso (Burnley); Hannes
Halldórsson (Randers) will start in goal. Most importantly, the
Iceland side’s secret weapon—the now famous ‘Thunderclap’—will
be no doubt be headed to Russia as well.
The state of the economy
Economic activity in Iceland recovered at a glacial pace after the
nation’s recession and financial crisis in 2008-09. Real GDP fell
approximately 13% from peak to trough during the downturn, and
took until Q2 2015 to regain its pre-recession highs. Similarly, the
unemployment rate jumped from just 1% in 2007 to a high of about
9% in 2009-10, and only fell back to historical norms of about 3%
by 2015. As in a number of small countries hard-hit by the global
financial crisis, emigration played a role in Iceland’s macro
adjustment: the population declined outright by % in 2010, and
also increased at a below-trend rate for a period thereafter. Real
house prices—which were at the centre of the economic
downturn—fell by almost 40% peak-to-trough, and only returned to
2007 levels in mid-2017.
More recently, Iceland’s economy has grown at a brisker pace, and
legacies of the financial crisis have faded. Growth averaged an
annualised rate of almost 6% over the last two years, helped by
solid gains in private consumption and business fixed investment—
both supported in part by a tourism boom. Prior to the crisis, the
current account deficit ranged from about 15% to 25% of GDP, but
the country has run a comfortable surplus of about 5% of GDP over
the last five years. Debt levels for nonfinancial corporations have
declined from a high of about 650% of GDP to 230% (as of 2016,
the latest available year), and debt levels for the household sector
have declined from about 120% of GDP to 80%.
Monetary policy has also normalized gradually over time. At the
height of the financial crisis the central bank raised interest rates in
order to stem capital outflows and its assets ballooned due to
emergency lending to financial institutions (and eventually creditor
claims on those banks after they were nationalised). The central bank
eventually let the currency go – the real effective exchange rate.
Lastly, capital markets have recovered—although not to the heady
days before 2008. In 2008 Iceland imposed capital controls to
prevent funds from leaving the country, froze Krona-denominated
assets abroad and borrowed from the IMF. As economic conditions
improved policymakers gradually unwound these measures. The
government re-entered international capital markets in 2012 with a
USD-denominated bond issue, and issued EUR-denominated debt
in 2014 (the country’s foreign currency debt is rated single-A). It
then repaid the IMF loan in 2015 and lifted capital controls in 2017.
The currency floats, with occasional central bank intervention.
Zach Pandl
Iceland
Statistics for Iceland
Source: , FIFA Public Website
Odds: 150/1 World Ranking: 22
Date Venue Against Local Time
16-Jun Spartak Stadium Argentina 16:00
22-Jun Volgograd Arena Nigeria 18:00
26-Jun Rostov Arena Croatia 21:00
Previous Appearances: 0
1st Round Match Schedule
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While Iran’s economic and football fortunes have tended to wax and
wane together over the long run (see Exhibit), recently these
fortunes have diverged. On the one hand, its football prospects
have improved steadily in the post-crisis era, with a FIFA World
Ranking that has risen from around 60 after the financial crisis to 36
currently. Iran’s chances of winning the 2018 World Cup, while
modest at around 500-1, are a roughly fivefold improvement over its
odds in 2014. On the other hand, Iran’s economic outlook is
significantly clouded by the prospect of new US sanctions.
-10
-5
0
5
10
150
10
20
30
40
50
60
70
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
FIFA World Ranking (best in displayed year; inverted; left axis)
GDP growth (yoy %; right axis)
On the pitch, much of the ascendance of ‘Team Melli’ (roughly,
‘National Team’ in Persian) is attributable to former Real Madrid
coach Carlos Queiroz, who has held the reins since 2011. While he
has announced that he will decline to extend his Iranian Football
Federation contract after this World Cup, his strategy of recruiting
talented foreign-born players to the Iranian squad has led to a
significant skill upgrade for the ‘Iranian Lions’.
They will need all of this skill to notch a victory in a loaded Group B,
which includes behemoths Portugal and Spain. Against these
heavyweights, Coach Queiroz is likely to employ a defensive
approach meant to neutralise talented strikers. To its credit, this
approach has nearly worked on the biggest of stages: in the 2014
World Cup, the ‘Persian Stars’ held Argentina scoreless for more
than 90 minutes before Lionel Messi finally broke through. If their
defence can hold, 24-year-old standout striker Alireza Jahanbakhsh
holds the key for Iran’s counterattack.
In the past, football has played a legitimately important role in
calming tensions between Iran and the rest of the world. Before
one of the most politically charged games in World Cup history,
against the US in 1998, Iranian and US players exchanged flowers
and souvenir pins, and posed for a now iconic, conciliatory group
photo. After Iran’s victory that day (its lone World Cup win), US
defender Jeff Agoos famously suggested that “we did more in 90
minutes than the politicians did in 20 years”.
Two decades later, tensions between the US and Iran have re-
emerged. In early May, President Trump announced that the US
would withdraw from a long-standing nuclear deal with Iran; as a
result, US sanctions are, at present, scheduled for a staggered re-
implementation beginning in Q3. Although the impact of US
sanctions on the global oil supply is unclear given that various
parties may be able to increase supply to offset decreases in oil
supplied by Iran, a re-imposition of US sanctions could have a
chilling effect on the Iranian economy.
For Iran, these short-term uncertainties are especially unwelcome
given a global macroeconomic backdrop that, overall, appears to
have become friendlier for oil exporters. We have long argued that
Iran, which features both large oil reserves and a well-educated
population, has the potential to eventually become a major
economic player on the global stage. Robust global oil demand and
an increasingly strong case for commodities over the next year
would, in the absence of renewed political uncertainties, be a
tailwind for this long-run outlook. Now, as the World Cup
approaches, Iran may hope to find, once again, that football can be a
useful tool for easing political tensions.
Ian Tomb
Iran
Over the long run, Iran’s GDP growth and its football
fortunes have waxed and waned together
Source: Goldman Sachs Global Investment Research; FIFA Public Website; World
Bank
Statistics for Iran
Source: , FIFA Public Website
Odds: 500/1 World Ranking: 36
Date Venue Against Local Time
15-Jun Saint Petersburg Stadium Morocco 18:00
20-Jun Kazan Arena Spain 21:00
25-Jun Mordovia Arena Portugal 21:00
Previous Appearances: 4 round 1
Host Year Outcome
Argentina 1978 Round 1
France 1998 Round 1
Germany 2006 Round 1
Brazil 2014 round 1
Previous World Cup Results
Games Played 12
Won 1
Drawn 3
Lost 8
Goals Scored 7
Goals Against 22
Yellow Cards 18
Red Cards 0
1st Round Match Schedule
Won Drawn Lost
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THE WORLD CUP 2018 CALENDAR
GROUP STAGE
14 JUNE
16:00
Moscow
Group A
v
RUS KSA
15 JUNE
13:00
Ekaterinburg
Group A
v
EGY URU
16:00
St. Petersburg
Group B
v
MAR IRN
19:00
Sochi
Group B
v
POR ESP
16 JUNE
11:00
Kazan
Group C
v
FRA AUS
14:00
Moscow
Group D
v
ARG ISL
17:00
Saransk
Group C
v
PER DEN
20:00
Kaliningrad
Group D
v
CRO NGA
13:00
Samara
Group E
v
CRC SRB
16:00
Moscow
Group F
v
GER MEX
19:00
Rostov-on-Don
Group E
v
BRA SUI
17 JUNE
13:00
Nizhny Novgorod
Group F
v
SWE KOR
16:00
Sochi
Group G
v
BEL PAN
19:00
Volgograd
Group G
v
TUN ENG
18 JUNE
13:00
Saransk
Group H
v
COL JPN
16:00
Moscow
Group H
v
POL SEN
19:00
St. Petersburg
Group A
v
RUS EGY
19 JUNE
13:00
Moscow
Group B
v
POR MAR
16:00
Rostov-on-Don
Group A
v
URU KSA
19:00
Kazan
Group B
v
IRN ESP
20 JUNE
ROUND OF 16
13:00
Samara
Group C
v
DEN AUS
16:00
Ekaterinburg
Group C
v
FRA PER
19:00
Nizhny Novgorod
Group D
v
ARG CRO
21 JUNE
13:00
St. Petersburg
Group E
v
BRA CRC
16:00
Volgograd
Group D
v
NGA ISL
19:00
Kaliningrad
Group E
v
SRB SUI
22 JUNE
13:00
Moscow
Group G
v
BEL TUN
16:00
Rostov-on-Don
Group F
v
KOR MEX
19:00
Sochi
Group F
v
GER SWE
23 JUNE
13:00
Nizhny Novgorod
Group G
v
ENG PAN
16:00
Ekaterinburg
Group H
v
JPN SEN
19:00
Kazan
Group H
v
POL COL
24 JUNE
15:00
Samara
Group A
v
URU RUS
15:00
Volgograd
Group A
v
KSA EGY
19:00
Kaliningrad
Group B
v
ESP MAR
25 JUNE
19:00
Saransk
Group B
v
IRN POR
15:00
Sochi
Group C
v
AUS PER
15:00
Moscow
Group C
v
DEN FRA
19:00
St. Petersburg
Group D
v
NGA ARG
26 JUNE
19:00
Rostov-On-Don
Group D
v
ISL CRO
15:00
Kazan
Group F
v
KOR GER
15:00
Ekaterinburg
Group F
v
MEX SWE
19:00
Moscow
Group E
v
SBR BRA
27 JUNE
19:00
Nizhny Novgorod
Group E
v
SUI CRC
15:00
Volgograd
Group H
v
JPN POL
15:00
Samara
Group H
v
SEN COL
19:00
Saransk
Group G
v
PAN TUN
28 JUNE
19:00
Kaliningrad
Group G
v
ENG BEL
QUARTER-FINALS SEMI-FINALS 3RD/4TH FINAL
1C
2D
v
15:00
Kazan
30 JUNE
1A
2B
v
19:00
Sochi
30 JUNE
1B
2A
v
15:00
Moscow
1 JULY
1D
2C
v
19:00
Nizhny
Novgorod
1 JULY
1E
2F
v
15:00
Samara
2 JULY
1G
2H
v
19:00
Rostov-on-Don
2 JULY
1F
2E
v
15:00
St. Petersburg
3 JULY
1H
2G
v
19:00
Moscow
3 JULY
W PQ1
W PQ2
v
15:00
Nizhny
Novgorod
6 JULY
W PQ5
W PQ6
v
19:00
Kazan
W PQ7
W PQ8
v
15:00
Samara
W PQ3
W PQ4
v
19:00
Sochi
Q1 Q2 Q3 Q4
W Q1
W Q2
v
19:00
St. Petersburg
W Q3
W Q4
v
19:00
Moscow
11 JULY
PQ1 PQ2 PQ3 PQ4 PQ5 PQ6 PQ7 PQ8 S1 S2
L S1
L S2
v
15:00
St. Petersburg
14 JULY
W S1
W S2
v
16:00
Moscow
15 JULY6 JULY 7 JULY 7 JULY 10 JULY
UK time shown
Source: FIFA
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THE WORLD CUP 2018 GROUPS
GROUP A
Russia
Saudi Arabia
Egypt
Uruguay
GROUP B
Portugal
Spain
Morocco
Iran
GROUP C
France
Australia
Peru
Denmark
GROUP D
Argentina
Iceland
Croatia
Nigeria
GROUP E
Brazil
Switzerland
Costa Rica
Serbia
GROUP F
Germany
Mexico
Sweden
Korea Republic
GROUP G
Belgium
Panama
Tunisia
England
GROUP H
Poland
Senegal
Colombia
Japan
KALININGRAD
Kaliningrad Stadium
35,000
x
x
x
ST. PETERSBURG
Stadium
67,000 NIZHNY NOVGOROD
Nizhny Novgorod Stadium
45,000
EKATERINBURG
Ekaterinburg Arena
35,000
KAZAN
Kazan Arena
45,000
MOSCOW
Luzhniki Stadium
80,000
Spartak Stadium
45,000
SARANSK
Mordovia
Arena
44,000
SAMARA
Samara Arena
45,000
ROSTOV-ON-DON
Rostov Arena
45,000
VOLGOGRAD
Volgograd Arena
45,000
SOCHI
Fisht Stadium
48,000
x
x
x
x
x x
Source: FIFASource: FIFA
Venue capacity
x
x
x
THE WORLD CUP 2018
VENUES - RUSSIA
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The stock market and Japan’s World Cup performance
In our 2014 World Cup and Economics, we noted the loose
negative correlation between Japan’s FIFA ranking and its stock
market. Four years on, we find the correlation holds. The Nikkei,
which fell below 10,000 in 2011, is now back above 22,000, a level
last seen in 1991. Meanwhile, Japan’s FIFA ranking, a lofty #13 in
2011, is now close to an all-time low of #60. Based on our simple
regression model using FIFA rankings and the Nikkei, the current
Nikkei level indicates the FIFA ranking should be #49, so we see
scope for a positive surprise in the team’s performance in Russia.
Nikkei at post-bubble high, FIFA ranking near all-time low
Source: Datastream, FIFA
Football growing as fast as the mobile phone industry
Regardless of Japan’s slippage in the FIFA rankings since 2011, the
population continues to support the sport wholeheartedly. J-League
attendance was in 2017, up % from 2011 (when
attendances dipped following the earthquake in March of that year),
while professional baseball attendance rose just % and real
GDP climbed +%. Remarkably, since 2011 football attendance in
Japan has followed the same trajectory as the fast-growing mobile
communication industry.
Opening the door to foreign workers?
Faced with a labour shortage, the Japanese government is slowly
but surely opening the door to foreign workers. There are around
foreign workers (data as of 2017) in Japan, including
students and trainees, accounting for 2% of employment. The J-
League restricts foreign players to five per squad, and three of the
18 match-day team members, equivalent to a % ratio, much
higher than the Japanese labour market average. Recently, J-
League club Vissel Kobe announced the signing of Andrés Iniesta,
the super-star footballer who recently left Barcelona. However, with
this addition, the squad will exceed the five-foreigner quota and will
need to let go of another foreign player under current rules. This has
prompted the team and the J-League to consider abolishing the
quota, which could become the new rule as early as next season.
J-League growing as fast as mobile communication
Source: J-League, NPB, Cabinet Office, METI
The 2018 World Cup
2018 will be the 6th consecutive World Cup for Japan since it made
its debut in 1998. The team has a track record of alternating
between knockout at the Group stage and the Round of 16. At the
2014 World Cup, Japan left Brazil without winning a single game, so
if the historical pattern were to persist, then the ‘Samurai Blue’
would make it to the Round of 16 in Russia. Half of the national
team took part in the 2014 World Cup, including Shinji Okazaki (who
plays for Leicester City), Shinji Kagawa (Borussia Dortmund) and
Makoto Hasebe (Eintracht Frankfurt). Regardless of the results, we
hope Japan will maintain the proud tradition of having received no
red cards in World Cup games.
Yuriko Tanaka
0
10
20
30
40
50
60
70
0
5000
10000
15000
20000
25000
1993 1996 1999 2002 2005 2008 2011 2014 2017
Nikkei 225 stock price (lhs)
Japan's FIFA ranking (rhs)
(NK225 index) (FIFA ranking)
50
60
70
80
90
100
110
120
130
140
2003 2005 2007 2009 2011 2013 2015 2017
J-league match attendance
Professional baseball attendance
Real GDP
Mobile communication industry activity
(2011=100)
Japan
Statistics for Japan
Source: , FIFA Public Website
Odds: 150/1 World Ranking: 60
Date Venue Against Local Time
19-Jun Mordovia Arena Colombia 15:00
24-Jun Ekaterinburg Arena Senegal 20:00
28-Jun Volgograd Arena Poland 17:00
Previous Appearances: 5
Host Year Outcome
France 1998 Round 1
Korea/Japan 2002 Round of 16
Germany 2006 Round 1
South Africa 2010 Round of 16
Brazil 2014 Round 1
Previous World Cup Results
Games Played 17
Won 4
Drawn 4
Lost 9
Goals Scored 14
Goals Against 22
Yellow Cards 31
Red Cards 0
1st Round Match Schedule
Won Drawn Lost
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The 2018 World Cup
South Korea’s national team, the Taeguk Warriors, are setting their
sights on advancing to the Round of 16 once again in the 2018 World
Cup. Since taking fourth place in the 2002 World Cup, which Korea co-
hosted with Japan, the national team has only once advanced to the
Round of 16 – in the South Africa 2010 World Cup. Korea boasts a
passionate and broad fan base (Red Devils), which organises unique
‘street-cheering’ events: close to a quarter of the entire Seoul
population participated in ‘street cheering’ during the 2002 World Cup
games. While team Korea admittedly faces a steep uphill battle in the
first round of the tournament in a tough group that includes Germany,
Mexico and Sweden, the national team can count on the unflagging
support of the Red Devils.
The state of football
Team Korea has been one of the strongest teams in Asia, as the first
country to represent Asia in the World Cup (1954), and the first and only
Asian team to reach the Semi-finals (2002). That said, the country’s
FIFA ranking has suffered recently, dropping 23 spots amid a transition
period for the new team coach in 2017. As of May 2018, Korea is
placed 61st in world rankings, the lowest in Group F: Germany (1st),
Mexico (15th) and Sweden (23rd). Past national team match records
against its competitors are not favourable either: Germany (1 won, 0
drawn, 2 lost), Mexico (4 won, 2 drawn, 6 lost) and Sweden (2 drawn, 2
lost). While faced with a difficult first round, team captain Ki Sung-yeung
and star player Son Heung-min remain hopeful of an upset from the
underdogs. Coach Shin Tae-yong will be laser-focused on winning the
first match with Sweden, as the national team’s entire tournament
performance has often depended on the result of the first match.
The state of the economy
South Korea’s economy, on the other hand, has benefited from a
broad-based global recovery in 2017. Exports gained %, after a
long-sustained period of stagnation since 2012 (% growth in the
previous five years), driven by commodity reflation and a strong
semiconductor cycle that together accounted for three-quarters of
the export growth in 2017. KOSPI, which tends to move along with
exports, has also broken out from the range of around 2,000 in
2012-2016, and reached almost 2,500 by end-2017. In the past,
Korea’s football performance measured by FIFA rankings has often
moved in the opposite direction to economic performance, unlike in
the case of Japan, for example. In 2018-2019, we continue to think
that Korea will be able to sustain growth at around potential, albeit
with uncertainties surrounding geopolitical risks, trade tensions and
DM monetary policy.
The state of the nation
Since early 2018, geopolitical issues have frequently dominated
news headlines amid signs of thawing inter-Korean relations ahead
of the PyeongChang Winter Olympics. President Moon Jae-in, in his
second year of office, met North Korea’s leader Kim Jong-un on
April 27, 2018 and signed a joint declaration that promised a
commitment to peace, prosperity and unification in the Korean
peninsula. The geopolitical landscape remains fairly volatile, but a
complete normalisation in inter-Korea relations, if it happens, could
have long-lasting implications for the Korean economy and
potentially the region.
Irene Choi/Goohoon Kwon
Korea Republic
Statistics for Korea Republic
Source: , FIFA Public Website
Stronger markets but lower football ranking in Korea
Source: Bloomberg, FIFA Public Website
Odds: 250/1 World Ranking: 61
Date Venue Against Local Time
18-Jun Nizhny Novgorod Stadium Sweden 15:00
23-Jun Rostov Arena Mexico 18:00
27-Jun Kazan Arena Germany 17:00
Previous Appearances: 9
Host Year Outcome
Switzerland 1954 Round 1
Mexico 1986 Round 1
Italy 1990 Round 1
USA 1994 Round 1
France 1998 Round 1
Korea/Japan 2002 Fourth place
Germany 2006 Round 1
South Africa 2010 Round of 16
Brazil 2014 Round 1
Previous World Cup Results
Games Played 31
Won 5
Drawn 9
Lost 17
Goals Scored 31
Goals Against 67
Yellow Cards 61
Red Cards 2
1st Round Match Schedule
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The 2018 World Cup
Mexico has a rich tradition in football, the nation’s most popular
sport, having qualified for 16 World Cups in total, including the last
six – one of only six nations to do so. Its national team currently
ranks 15th in the FIFA World Ranking, and reached the 2018 World
Cup with a convincing performance, finishing in first place in the
CONCACAF qualifiers. The squad, led by Colombian coach Juan
Carlos Osorio, is looking to finally crack the Round of 16 this time
around, where it has been eliminated in the past 6 World Cups.
However, the national team – popularly known as El Tri after the
tricolour Mexican national flag – did not have much luck in the group
draw and has a tough path ahead to the Quarter-finals. It will face
defending champions Germany in the Group stage, likely battling for
second place with Sweden and South Korea, the other two teams
in Group F. If Mexico makes it through, Brazil could be its first
opponent in the knockout stage.
Mexico’s chance of progressing in Russia will depend to a large
extent on its mid-field and offence: 22-year-old mid-fielder Hirving
‘Chucky’ Lozano comes to the Cup from a successful debut season
for PSV Eindhoven, scoring 17 goals in 29 matches, as does Carlos
Vela, who plays for Los Angeles FC. Up front, the squad will be
helped by star player Javier ‘Chicharito’ Hernández, who, despite
being benched at West Ham United this season, can always be
counted on to deliver for El Tri as its all-time leading goal-scorer. In
defence, Mexican fans will hope that renowned veteran goalkeeper
‘Memo’ Ochoa repeats his performance from the 2014 World Cup,
with notable saves against Brazil and the Netherlands. Despite the
odds, El Tri has the necessary talent to surprise. As Mexicans like to
chant every four years: ¡Sí se puede! (Yes, we can.)
The state of the economy
The current macroeconomic backdrop is far from dismal, yet
provides little to celebrate. The macro picture remains complex,
with modest growth, sharply declining oil production, high interest
rates, binding restrictions on fiscal spending, a testy relationship
with the dominant trading partner, and lingering rule of law
(security) and corruption issues. Largely, the near-term macro-
financial outlook is uninspiring and the economy faces significant
domestic and external challenges. On the external side, we
highlight the uncertain outlook for the renegotiation of the NAFTA
treaty and Fed policy and balance sheet normalisation, and on the
domestic side, a presidential election in July that could potentially
foreshadow a shift towards a more unconventional interventionist
policy mix.
Notwithstanding the domestic and external risks and challenges, we
think the economy continues to be well-managed, the policy
approach market-friendly and, on all counts, we see no signs of
major deep-seated domestic or external macro imbalances. Indeed,
in the calibration of monetary, FX and fiscal policy the authorities
have been steadfast in responding proactively to the evolving
challenges in the quest to strengthen domestic macro
fundamentals. Furthermore, the currency is trading at a competitive
level and foreign sponsorship of local bond duration has been firm
despite the recent bouts of volatility and gyrations in international
financial markets.
The state of the nation
On July 1, with the World Cup well into the Round of 16 knockout
stage, 88 million registered Mexican voters will participate in the
largest general elections in their history. Presidential, legislative and
a number of local elections will take place simultaneously. Voters
will elect a new President and Congress (500 Lower House
representatives and 128 Senators). Andrés Manuel López Obrador
(AMLO)—the leftist nationalist candidate running for the Morena-PT-
PES coalition—has been enjoying a solid and steady double-digit
lead in the polls. Recent polls suggest that the outcome and policy
implications of the July 1 elections could be far from ‘business as
usual’, as they will likely change the overall balance of political
power and could also herald a shift from the hitherto investment-
friendly and conventional policy mix towards a potentially more
inward-looking, heterodox/interventionist platform.
Alberto Ramos and Gabriel Fritsch
Mexico
Statistics for Mexico
Source: , FIFA Public Website
Odds: 80/1 World Ranking: 15
Date Venue Against Local Time
17-Jun Luzhniki Stadium Germany 18:00
23-Jun Rostov Arena Korea Republic 18:00
27-Jun Ekaterinburg Arena Sweden 19:00
Previous Appearances: 15
Host Year Outcome
Uruguay 1930 Round 1
Brazil 1950 Round 1
Switzerland 1954 Round 1
Sweden 1958 Round 1
Chile 1962 Round 1
England 1966 Round 1
Mexico 1970 Quarter-finals
Argentina 1978 Round 1
Mexico 1986 Quarter-finals
USA 1994 Round of 16
France 1998 Round of 16
Korea/Japan 2002 Round of 16
Germany 2006 Round of 16
South Africa 2010 Round of 16
Brazil 2014 Round of 16
Previous World Cup Results
Games Played 53
Won 14
Drawn 14
Lost 25
Goals Scored 57
Goals Against 92
Yellow Cards 68
Red Cards 6
1st Round Match Schedule
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Tough group for a talented squad
Luck was not on Morocco’s side for the World Cup draw last
December, as the ‘Lions of the Atlas’ landed in a group with Spain,
Portugal and Iran. With most already penciling in the Iberian giants
for the top two spots of the group, the quality of the Moroccan side
may have gone overlooked. Managed by the highly regarded Hervé
Renard, Morocco qualified for the World Cup without conceding a
goal in the qualifying campaign. Neither Spain nor Portugal made it
out of the Group stage four years ago, and the Atlas Lions will fancy
their chances of advancing should the Iberians struggle again in
Russia.
Defence, obviously, is Morocco’s greatest strength. Renard has
constructed an airtight backline anchored by Juventus centre-back
Medhi Benatia. While some have wondered where the goals are in
this side, Khalid Boutaib stepped up during qualification, scoring
four times in six matches. Perhaps the most exciting player in this
Moroccan team, however, is Ajax mid-fielder Hakim Ziyech, who
produced an inspired performance in a 6-0 rout of Mali during
qualifying. Age is somewhat of a concern, with half a dozen key
players over 30, including Benatia and Boutaib, so it remains to be
seen how this side will hold up for ninety minutes against the depth
of Spain and Portugal.
Morocco is no stranger to stunning upsets on football’s biggest
stage. In 1986, they became the first African team to advance to
the knockout stages of the World Cup. Even more impressively,
they did so by winning a group including Portugal, Poland and
England. They narrowly lost 1-0 that year to eventual runners-up
West Germany. The last time Morocco competed at the World Cup,
in 1998, they were on the brink of advancing to the second round
once again until Norway scored a last-minute winner against Brazil
to seal second place in the group. Twenty years on, this Moroccan
side will believe they have the talent to return to the knockout
rounds.
State of the nation and the economy: a strong economy
that has left some behind
To many observers, Morocco’s development has been striking. The
economy has expanded thanks to a growing manufacturing sector,
investment by European and Chinese firms, and stronger links with
sub-Saharan Africa. Real GDP per capita has increased 70% since
2000. Tax benefits have drawn an influx of foreign investors,
including high-tech firms, and the country has become an African
hub of innovation. Tourism, one of its primary industries, is
booming, and Morocco was Africa’s top tourist destination last year.
Overall, the economy is growing at around 4%, the budget deficit
has fallen to % of GDP and inflation remains well-contained
below 2%.
This high-level perspective, however, masks some social
discontent. Even as the country has modernised and poverty has
decreased over the past decade, many Moroccans feel left behind.
In parts of the north, for example, the youth unemployment rate is
40%, over twice the national average.
The frustrations of many Moroccans have become evident in a
series of highly effective boycotts this year. The boycotts, which
started on social media and have spread across the country, have
targeted basic consumer goods sold by large Moroccan
multinational corporations in an attempt to force the companies to
lower their prices. The current government has also come under
acute pressure for its out-of-touch response to these protests. 2018
has shown signs that, while Morocco boasts a robust economy on
many metrics, there is still significant scope for liberalisation for the
benefit of the Moroccan people.
Lotfi Karoui and James Weldon
Morocco
Statistics for Morocco
Source: , FIFA Public Website
Odds: 250/1 World Ranking: 42
Date Venue Against Local Time
15-Jun Saint Petersburg Stadium Iran 18:00
20-Jun Luzhniki Stadium Portugal 15:00
25-Jun Kaliningrad Stadium Spain 20:00
Previous Appearances: 4
Host Year Outcome
Mexico 1970 Round 1
Mexico 1986 Round of 16
USA 1994 Round 1
France 1998 Round 1
Previous World Cup Results
Games Played 13
Won 2
Drawn 4
Lost 7
Goals Scored 12
Goals Against 18
Yellow Cards 19
Red Cards 0
1st Round Match Schedule
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A dynamic team, with good chances of emerging from the
Group stage
Nigeria has qualified for five out of seven World Cup contests going
back to the 1990s, moving beyond the Group stage in three out of
those five, but only once since the 1990s (in Brazil in 2014). This
arguably makes Nigeria Sub-Saharan Africa’s pre-eminent football
team. For this tournament, Nigeria has recently had a strong run,
but it nonetheless finds itself in a group that is difficult and perhaps
also one of the tournament’s most exciting, along with Argentina,
Croatia and Iceland.
Argentina – despite being the group’s obvious favourite to qualify –
barely scraped through qualifiers and also lost to Nigeria in a friendly
game in Krasnodar in November 2017. Nigeria and Argentina have
recently had a somewhat tightly knit football history, whereby
Nigeria has in some senses had the upper hand. They have been in
the same World Cup group four times going back to 1994, in which
Nigeria has lost every single match; that said, Nigeria managed to
qualify for the Round of 16 in 1994, edging out Argentina, and then
subsequently defeated Argentina 3-2 in the dramatic Olympic
football final in 1996. Meanwhile, Iceland’s team is strong but
untested on World Cup turf, given that this is the small country’s
first time competing in the tournament. Croatia’s team is
experienced and fierce, but historically its performance has been
quite volatile. This mix leaves Nigeria with reasonably good chances
of emerging from the Group stage.
Like the country, Nigeria’s football team has huge potential in its
raw material. Its star player is likely Ahmed Musa, a forward at
CSKA Moscow and scorer of two out of three of Nigeria’s World
Cup goals in Brazil (both, incidentally, against Argentina). In the mid-
field, the team sports right-winger Victor Moses (of Chelsea fame)
and team captain John Obi Mikel (a Chelsea veteran, now playing
for Tianjin TEDA). One of the lesser known but exciting players is
Nigerian-Russian defender and St Petersburg native Brian Idowu,
who made his debut scoring one of the goals that led Nigeria to
victory in the 2017 friendly against Argentina. Although slightly raw,
the team’s players are young, dynamic, full of potential and
equipped with what is widely-recognised as the best kit of this
World Cup tournament, inspired by that worn by the successful
Nigerian team at the 1996 Olympics. Moreover, with FIFA’s
decision to advance prize money to the Nigerian Football
Federation, bonus and pay rows are less likely to distract players
from their focus on the pitch this time around.
Improving economic prospects, following several difficult
years
After several challenging years following the 2014-15 oil price
shock, Nigeria’s economy has now turned the corner and enjoys
improving prospects. GDP growth slowed sharply in 2015 and
output contracted by % in 2016 in response to the supply shock,
before recovering modestly to % in 2017. We expect that the
economic recovery will gain pace in 2018 with growth for the year
likely to come in at %. While still significantly weaker than the
growth recorded prior to the oil shock, the Nigerian economy is still
adjusting to the new environment: FX policy has mostly normalised,
but inflation remains elevated and monetary policy remains
constrained and in a relatively tight policy stance, holding back growth.
As the inflation and exchange rate settings allow monetary policy to
normalise further, and as oil prices remain supportive, however, we
see space for a more sustained economic recovery in the years to
come. Nonetheless, significant structural constraints remain in play:
fiscal revenue as a share of GDP is very low, FX and monetary
policies lack some credibility, and domestic security and political
risks remain real (with presidential elections scheduled for early
next year). As with Nigeria’s football team, the economy has very
large potential, which greater policy discipline and consistency
would go a long way to help to unleash.
Andrew Matheny
Nigeria
Statistics for Nigeria
Source: , FIFA Public Website
Odds: 150/1 World Ranking: 47
Date Venue Against Local Time
16-Jun Kaliningrad Stadium Croatia 21:00
22-Jun Volgograd Arena Iceland 18:00
26-Jun Saint Petersburg Stadium Argentina 21:00
Previous Appearances: 5
Host Year Outcome
USA 1994 Round of 16
France 1998 Round of 16
Korea/Japan 2002 Round 1
South Africa 2010 Round 1
Brazil 2014 Round of 16
Previous World Cup Results
Games Played 18
Won 5
Drawn 3
Lost 10
Goals Scored 20
Goals Against 26
Yellow Cards 27
Red Cards 1
1st Round Match Schedule
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The 2018 World Cup
Panama will make its first-ever World Cup appearance in 2018. A
controversial victory over Costa Rica and a surprise loss by the
United States to Trinidad and Tobago during the CONCACAF
qualifiers earned La Marea Roja (Red Tide) a ticket to Russia and
crushed the hopes of dozens of US fans from Portland to Brooklyn.
Although football is not as popular as baseball in Panama, the
country’s first success in 11 World Cup qualification efforts led to a
night of celebration and the declaration of a national holiday by
President Juan Carlos Valera.
Since qualifying for the World Cup, Panama has had mixed results in
international play, including a narrow 1-0 defeat to Denmark, as well
as a more lopsided 6-0 defeat to Switzerland in March, and a 1-0
victory over Trinidad and Tobago in April.
Panama has a challenging path ahead. Up against Group G
competitors Belgium, England and Tunisia, Panama faces among
the longest bookmakers’ odds of any team in Russia.
The Panamanian team is known for a determined and physical style
of play. Coach Hernán Dario Gómez, a World Cup veteran from his
days coaching first his native Colombia and later Ecuador, is likely to
take a defensive approach, fielding only one striker against the most
challenging opponents.
Despite the Panamanian team’s lack of World Cup experience, the
squad includes many veterans with international experience—in
fact, Panama will field the oldest team in this year’s Cup. Many of
the Panamanian players are known to international football fans
from their years playing in leagues in South America, Europe and
the US. Among the team’s top players are captain Román Torres of
Major League Soccer’s Seattle Sounders, goalkeeper Jaime Penedo
of Dinamo Bucharest, striker Luis Tejada of Sport Boys, and mid-
fielders Aníbal Godoy of the San José Earthquakes, Gabriel Gómez
of Atlético Bucaramanga, and Alberto Quintero of Universitario.
The economy
With real GDP growth of nearly 6% annualised over the last 25
years and per capita growth of almost 4%, Panama has emerged as
one of the wealthiest countries in Latin America. In 2018 the
economy will mark 30 years without negative year-on-year growth,
surpassing even Australia’s record of avoiding recession.
The economy’s recent performance has been solid. Panama
weathered the global financial crisis fairly well and has kept
unemployment at or below 6% since 2011, an impressive
improvement over the double-digit unemployment rates seen in the
1980s, 1990s and early 2000s. Inflation rose during the crisis years,
but has remained below 2% over the past few years.
Despite a population of less than four million, Panama has
established itself as a commercial services hub in Latin America.
Key service industries include logistics, finance, flagship registry,
health care, tourism and, of course, transportation. The country’s
most important development project in recent years was the
extension of the Panama Canal from 2007 to 2016, which doubled
the canal’s capacity and allowed it to accommodate much larger
ships. Other major infrastructure projects, including an expansion of
the metro system in Panama City and an urban renewal project in
Colón, should also provide long-term benefits.
Panama’s role as a business services hub has also attracted
unwelcome attention over the last couple of years as a result of the
so-called ‘Panama Papers’, a collection of million leaked
documents from Panamanian law firm Mossack Fonseca. The
papers provided detailed records of offshore shell corporations held
by clients around the world, and in some cases revealed tax evasion
and other financial crimes.
The bad press appears to have done little to reduce Panama’s global
appeal. The country has continued to receive strong inflows of
foreign direct investment and more recently of foreign workers, as
Venezuelan emigrants have made Panama one of their top
destinations. Inbound investment continues to finance a current
account deficit that remains sizeable but has been shrinking.
A unique feature of the Panamanian economy is that it has been
dollarised for over a century. Panama does not have a central bank,
giving up an independent monetary policy in favour of using the US
Dollar. While reliance on a foreign currency has caused problems
elsewhere, Panama has fared well so far.
Despite the country’s overall success, the economy continues to be
marked by one of the highest levels of inequality in Latin America
and a large rural-urban gap. While Panama City has boomed, roughly
a quarter of the rural population still lives in poverty. The country’s
indigenous territories remain especially poor, often lacking adequate
water, sanitation and health services.
David Mericle
Panama
Statistics for Panama
Source: , FIFA
Odds: 1000/1 World Ranking: 55
Date Venue Against Local Time
18-Jun Fisht Stadium Belgium 18:00
24-Jun Nizhny Novgorod Stadium England 15:00
28-Jun Mordovia Arena Tunisia 21:00
Previous Appearances: 0
1st Round Match Schedule
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The 2018 World Cup
Peru ended the regular South America qualifier season in fifth place,
leading them to fight for the last berth to the World Cup against
New Zealand in a two-match playoff. After a 0-0 tie in the first
match, La Blanquirroja (‘The White-and-Red’) scored a dramatic 2-0
victory to end the country’s 36-year drought from the World Cup.
Although there were doubts about Peru’s chances of securing a
ticket to soccer’s biggest stage, there was never a question about
the nation’s passion for soccer. Case in point, the government
declared a national holiday in celebration of its first World Cup
appearance in a generation.
During the interim between the qualifiers and the World Cup, Peru
was dealt a severe blow when FIFA announced that the squad’s
captain, 34-year-old striker Paolo Guerrero, considered by some
commentators to be the nation’s greatest player of all time, would
miss the Cup after the Court of Arbitration for Sport extended his
drug ban. Guerrero is the national team’s record goalscorer with 32
goals in 86 caps. He is also a two-time winner of the Copa América
Golden Boot and led the team through the qualifiers with five goals,
including the one against Colombia for a 1-1 tie that allowed Peru a
chance for the last spot in the World Cup. Amid widespread calls for
FIFA to lift the ban, ranging from the country’s President to the
captains of Peru’s Group C opponents, Switzerland’s Supreme
Court finally granted a last resort appeal clearing Guerrero to play.
Besides his star striker, coach Ricardo Gareca will draw on the
talent from less known but also central players, such as Edison
Flores and Jefferson Farfán. The lefty mid-fielder Flores joined the
national team in 2013 at just 19 years old and matched Guerrero’s
five goals during the South America qualifiers. Farfán, a veteran who
has played in the national team for a remarkable 15 years, scored
decisive goals in the qualifying campaign on the 1-0 win over
Paraguay and the opener against New Zealand.
Mr. Gareca, an Argentine-born former player, has done a notable job
since taking the helm of Peru’s national team in 2015. He led the
team to a third place at the 2015 Copa América, the quarter-finals at
the Copa América Centenario in 2016, and conquered the prized
spot at Russia 2018, taking the nation from a modest 53rd place to
an enviable 11th place in the FIFA World Ranking, the team’s best
position in a quarter-century.
Still, Gareca will face a difficult challenge in leading his team
through the Group stage. He would benefit greatly from winning his
first game against Denmark, currently ranked just one spot behind
Peru in the FIFA World Ranking. A victory in their opening game
would allow Peru some comfort against France (ranked 7th by FIFA),
their toughest opponent, though the match against underdogs
Australia (ranked 40th) should be a must-win.
Economics and politics
The economy has started to recover from a disappointing year in
2017, marked by a severe weather shock that disrupted production
in the first calendar months and a growing corruption scandal that
culminated in the resignation of President Pedro Pablo Kuczynski.
On March 23, 2018, first vice-president Martín Vizcarra took office
and calmed tensions between Congress and the government,
reducing political and policy uncertainty and setting the stage for a
return of much-needed public and private investment.
Although the % real GDP growth in 2017 was second only to
Argentina among the major Latin American economies, it was far
from the country’s post-crisis average of %. However, a
considerable monetary easing over the past year has helped
revitalise domestic demand and rising metal prices have supported
net exports. As a result, we expect growth to accelerate to % in
2018 owing mainly to a better performance of the manufacturing,
construction and commerce sectors.
Paulo Mateus
Peru
Statistics for Peru
Source: , FIFA Public Website
Odds: 150/1 World Ranking: 11
Date Venue Against Local Time
16-Jun Mordovia Arena Denmark 19:00
21-Jun Ekaterinburg Arena France 20:00
26-Jun Fisht Stadium Australia 17:00
Previous Appearances: 4
Host Year Outcome
Uruguay 1930 Round 1
Mexico 1970 Quarter-finals
Argentina 1978 Round of 16
Spain 1982 Round 1
Previous World Cup Results
Games Played 15
Won 4
Drawn 3
Lost 8
Goals Scored 19
Goals Against 31
Yellow Cards 9
Red Cards 1
1st Round Match Schedule
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Poland has the momentum, but do they have the ability?
Poland finished third at the 1982 World Cup – losing 2-0 in the semi-
final to eventual winners Italy – but has failed to produce a team
that can consistently deliver on the international stage in the years
since then. Poland hasn’t made it out of the Group stage at the
World Cup since 1986 and didn’t qualify for the past two World
Cups. Moreover, as co-host of the 2012 Euro Championship, the
team faced the ignominy of coming last in their group, despite
having home advantage in all their games.
However, the period since the 2014 World Cup has marked
something of a turning point for Poland. Under the stewardship of
Adam Nawalka – a member of the 1982 team – the team reached
the quarter-finals of the 2016 Euros, losing in a penalty shootout to
eventual winners Portugal. And, in their qualifying matches for
Russia 2018, they won 8 out of 10 games, driving them into the top
10 of the FIFA world football ranking (reaching a high of 6th in the
world in May 2018). Their success has been spearheaded by their
captain and striker, Bayern Munich’s Robert Lewandowski, who
scored a record-breaking 16 goals in the qualification stage, scoring
in 9 out of 10 games and collecting three hat-tricks.
Poland’s fans will be hoping that the team can capitalise on recent
momentum and deliver results worthy of their ranking. Having been
drawn in the relatively easy Group H, the prospect of them moving
beyond the Group stage looks promising. Poland will first face
Senegal in Moscow on June 19, then Colombia in Kazan on June
24, and finally play Japan in Volgograd on June 28. Depending on
the result of their game against the – also highly ranked – Colombia,
they may even top the group.
There are still challenges for the team to overcome. They are
arguably over-reliant on Robert Lewandowski and, were he to
become injured or under-perform, their attack will be severely
hampered. Furthermore, while Monaco’s Kamil Glik and Dortmund’s
Lukasz Piszczek are both strong defenders, the back four is
nonetheless leaky; of the 18 European teams to finish in the top
two of their qualifying groups, Poland conceded the most goals.
Strong goalkeepers, such as Lukasz Fabianski and Wojciech
Szczesny, do not seem to have improved Poland’s ability to keep a
clean sheet either. It seems that watching Poland may be one for
the neutrals – exciting games, with lots of goals at either end.
If Poland makes it through the Group stage, they can expect to face
Belgium or England in the Round of 16. This would undoubtedly be
a challenge for a team that hasn’t played a big European team since
Euro 2016 – and, moreover, hasn’t won against one since beating
Germany in 2014. But Lewandowski is capable of feats of genius,
nonetheless – with a player who can score 5 goals in 9 minutes (as
he once did in the Bundesliga), anything is possible.
The Polish economy, like the Polish team, is moving from
strength to strength
The Polish economy finds itself in a strong position, with robust
growth yet inflation remaining subdued. Polish GDP grew by
+%yoy in 2017 and we forecast that this strength will persist
throughout 2018. We expect growth to be supported by the
combination of four factors: robust external demand, easy financial
conditions, healthy household balance sheets and an increased
inflow of EU funds.
Wage growth in Poland has picked up in the past year, driven by the
combination of strong output growth, low unemployment and an
increasingly positive output gap. However, in common with other
CEE economies, the link between wage growth and inflation
appears to have weakened and consumer price dynamics remain
soft. We expect headline inflation to average +%yoy in 2018 and
+%yoy in 2019, and do not expect inflation to return to the
National Bank of Poland's %yoy target on a sustainable basis
until late 2019. Poland’s external balances are the healthiest they
have ever been, recording a small current account surplus in 2017
and the government deficit also remains healthy; after introducing
measures to clamp down on tax evasion the budget deficit in 2017
was the lowest it had been in 20 years, at % of GDP.
The favourable growth/inflation mix is accompanied by
accommodative monetary policy. Over the past 18 months – and
the last 9 months in particular – the NBP’s monetary policy guidance
has become increasingly dovish in tone. On account of our
expectation that Polish inflation will return to target only slowly, as
well as our forecast that the ECB will delay raising rates until
2019H2, we expect the NBP to maintain its policy rate at +%
until 2019Q4.
Poland’s economy – much like its football team – is in the strongest
position it has been in for years.
Loughlan O’Doherty* and Kevin Daly
*Loughlan is an intern on the CEEMEA Economics team.
Poland
Statistics for Poland
Source: , FIFA Public Website
Odds: 40/1 World Ranking: 10
Date Venue Against Local Time
19-Jun Spartak Stadium Senegal 18:00
24-Jun Kazan Arena Colombia 21:00
28-Jun Volgograd Arena Japan 17:00
Previous Appearances: 7
Host Year Outcome
France 1938 Round 1
Germany 1974 Third
Argentina 1978 Round of 16
Spain 1982 Third
Mexico 1986 Round of 16
Korea/Japan 2002 Round 1
Germany 2006 Round 1
Previous World Cup Results
Games Played 31
Won 15
Drawn 5
Lost 11
Goals Scored 44
Goals Against 40
Yellow Cards 40
Red Cards 1
1st Round Match Schedule
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Success through ‘specialisation’ is easier for an economy
than for a football team
Portugal’s performance in the 2018 World Cup may well depend on
how well it leverages one player’s skills – those of Cristiano Ronaldo
– for the benefit of the team. Yet, leveraging excellence in one area
for the broader benefit comes more naturally to an economy than
for a football team.
Specialisation versus broad-based success
There are good reasons why economies specialise in one activity or
sector, perhaps building on some natural endowment or
accumulated ‘know-how’. For example, the Portuguese economy
continues to benefit from a strong export performance in food and
beverages, and in footwear and clothing.
But standard explanations for why economies specialise in this way
suggest that doing likewise in football is difficult.
David Ricardo’s idea of ‘comparative advantage’ suggests
economies build success around a small number of activities.
Ricardo’s original description of comparative advantage accounted
for patterns of trade between Portugal and England. Portugal
produced both wine and cloth more cheaply than England. But it
specialised in producing wine and imported cloth from the north of
England because Portugal’s relative efficiency – or comparative
advantage – was greater in the production of wine than in cloth.
All economies have a comparative advantage in something. When
trade is feasible economies specialise and build some degree of
economic success around a narrow range of activities.
Performance in football is different. There are few examples where
success has been built around one or two players’ abilities. One
notable example is Diego Maradona’s success with Napoli, an
otherwise unremarkable football team which won the Italian league
title in 1986/87 and 1989/90, as well as the UEFA Cup in 1989. Such
rare examples seem to apply at the club level rather more than
national level.
Again, Ricardo’s comparative advantage may help explain why.
Trade needs to be feasible to facilitate an economy or team
specialising successfully. In football, this is more plausible at club
level – where foreign players can be imported into a team to
complement one or two star players – than it is for national teams,
where nationality constrains such trade.
Relying on leveraging one star player’s excellence also leaves a
team vulnerable to shocks. A robust economy has a certain
dynamism and good institutions which lend a capacity to adapt at
low cost to such unexpected events.
It may be easier for an economy to be robust to shocks than a
football team. If a shock strikes one sector, . if tariffs on imports
from Portugal are increased, resources can be reallocated to other
sectors, especially if the economy is flexible and the shock is not
too big.
The importance of being able to reallocate resources across sectors
to adjust more easily to economic shocks is a lesson that the
Portuguese economy learned first-hand during its IMF/EC/ECB
adjustment programme and led to the introduction to a series of
structural reforms to improve such adaptability to shocks.
Portugal’s economy has been in a recovery phase for the past three
years, and growth in real GDP was % last year – its strongest
year of growth since 2000. While this marks the fourth year of rising
output, GDP remains more than 1% below its 2008 peak.
In football, risk of injury is an ongoing potential source of shock
affecting all players and teams. This adds to the sense that
leveraging ‘narrow’ excellence in football is often likely to be a less
robust strategy than it is for an economy.
Looks like ‘team spirit’
Yet, surely, Portugal’s success in winning the 2016 European
Championship suggests the opposite? Perhaps as reigning
European Champions, Portugal has shown that it should be among
the favourites for success – having upset the odds in winning the
2016 European Championships. We believe otherwise.
Portugal’s success in 2016 involved the team compensating for
Ronaldo’s absence, after he left the final early in the first half, being
forced to play as a team without its star player. As one newspaper
reported: “So the one-man team has become European champions,
defeating the host nation without the one man they apparently
could not win without”.
That experience suggests that ultimately footballing success is
based around playing as a team, rather than specialising in one part
of the field of play. If Portugal succeeds at the 2018 World Cup it
will be because, like any other team, it has managed to work as a
team rather than because it has leveraged the performance of its
one world class asset.
Andrew Benito
Portugal
Statistics for Portugal
Source: , FIFA Public Website
Odds: 25/1 World Ranking: 4
Date Venue Against Local Time
15-Jun Fisht Stadium Spain 21:00
20-Jun Luzhniki Stadium Morocco 15:00
25-Jun Mordovia Arena Iran 21:00
Previous Appearances: 6
Host Year Outcome
England 1966 Third place
Mexico 1986 Round 1
Korea/Japan 2002 Round 1
Germany 2006 Fourth place
South Africa 2010 Round of 16
Brazil 2014 Round 1
Previous World Cup Results
Games Played 26
Won 13
Drawn 4
Lost 9
Goals Scored 43
Goals Against 29
Yellow Cards 40
Red Cards 6
1st Round Match Schedule
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Flight of The Falcons
This is the fifth occasion in which Saudi Arabia, or Al-Suqour (The
Falcons), have qualified for the FIFA World Cup – not bad for a team
that entered the competition for the first time in 1978 and qualified
for the first time in 1994.
Saudi Arabia are the lowest-ranked team in Russia 2018 and betting
markets point to them being eliminated in the first round (their
opponents in Group A are Russia, Egypt and Uruguay). But The
Falcons are used to being viewed as underdogs and it hasn’t
prevented them from springing surprises in the past. In the 1994
World Cup, Saudi Arabia beat both Belgium and Morocco in the
Group stage before being defeated by Sweden in the Round of 16;
and it could be this spirit that is somehow captured by our statistical
forecast model, which has them finishing second in their group
(though then losing to Portugal in the next round).
In Russia 2018, the Saudis will face the hosts in the opening game
of the tournament. All of the pressure is likely to be on Russia and
the outcome of the first match has often been surprising in the
past. If The Falcons can take something from this game, who
knows where it will lead?
Oil price recovery brings relief
The Saudi economy’s prospects are, of course, highly exposed to oil
prices. When oil prices surged between 2009 and 2011, real GDP
growth rose to more than +10% and the current account surplus
reached more than 20% of GDP. However, as prices declined in
2014 and 2015, growth fell sharply and the economy’s current
account balance swung into deficit.
The (partial) recovery in oil prices in the past year has brought more
positive news for the Saudi economy. While real GDP is still
declining – on account of Saudi Arabia’s commitment to reduce oil
supply under the OPEC+ agreement – income levels are improving
and the current account balance has moved back into surplus.
Looking ahead, the Saudi Arabian authorities are attempting to
reduce the economy’s reliance on oil and diversify the economy
through the implementation of the ‘Vision 2030’ reforms. This is a
wide-ranging policy plan, affecting all parts of the Saudi economy
and society, including structural reforms, the sale of publicly owned
assets and significant investment in public infrastructure.
Football and oil – The secret link
0
20
40
60
80
100
120
140
20
30
40
50
60
70
80
90
100
110
120
80 85 90 95 00 05 10 15 20
World football rank (LHS)
Oil prices (Real $, RHS, lagged 1-year)
Source: Goldman Sachs Global Investment Research.
Is there a causal link between the performance of the Saudi Arabian
football team and oil prices? Almost certainly not. However, we
didn’t let this mere fact stand in the way of us conducting an in-
depth econometric study of the relationship.
Our ‘detailed and rigorous’ analysis suggests that there is a
remarkably strong (and statistically significant) negative relationship
between oil prices and the fortunes of Saudi Arabia’s football team
– the more oil prices fall, the better the football team does (see
exhibit). Whether the causation flows from oil prices to football or
from football to oil prices is beyond the scope of our analysis. Either
way, the good news for the Saudi football team is that, given the
current level of oil prices, our results suggest that the team should
be performing better than their current ranking implies.
Perhaps The Falcons are ready to surpass expectations in Russia
2018.
Kevin Daly and Loughlan O’Doherty*
*Loughlan is an intern on the CEEMEA Economics team.
Saudi Arabia
Statistics for Saudi Arabia
Source: , FIFA Public Website
Odds: 1000/1 World Ranking: 67
Date Venue Against Local Time
14-Jun Luzhniki Stadium Russia 18:00
20-Jun Rostov Arena Uruguay 18:00
25-Jun Volgograd Arena Egypt 17:00
Previous Appearances: 4
Host Year Outcome
USA 1994 Round of 16
France 1998 Round 1
Korea/Japan 2002 Round 1
Germany 2006 Round 1
Previous World Cup Results
Games Played 13
Won 2
Drawn 2
Lost 9
Goals Scored 9
Goals Against 32
Yellow Cards 22
Red Cards 1
1st Round Match Schedule
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Can the Lions of Teranga repeat the success of 2002?
Senegal has appeared at the World Cup finals only once before – in
Japan/Korea in 2002. After defeating reigning champions France in
their first-ever World Cup game and driven by 9 goals in the
tournament by a young El-Hadji Diouf (who won the tournament’s
silver boot in the process), the Senegalese team became only the
second African team ever to progress as far as the Quarter-finals.
On a rainy evening in Osaka, the Lions of Teranga found
themselves fighting for a golden goal against Turkey. With a well-
timed cross and a deft flick of the boot from substitute Ilhan
Mansız, Turkey ended Senegal’s run of glory.
The current generation of The Lions will be hoping to match (or
even surpass) the feats of the 2002 squad. Their results, so far,
bode well. While their qualification was not without controversy –
the referee in their first match against South Africa awarded a
contentious handball against Senegal – the team qualified for the
tournament comfortably. After a rematch versus South Africa, they
remained undefeated, winning 4 out of 6 games.
The road to the Quarter-finals will not be easy – while Group H is
lacking any of the tournament’s traditional big-hitters, Poland and
Colombia are both currently ranked in the world’s top ten on most
metrics, and all three games are likely to present a challenge. Their
first match, facing group favourites Poland in Moscow on June 19,
will probably be their most difficult. In their second match, they will
play Japan in Ekaterinburg on June 24, and finally face Colombia on
June 28 in Samara. Finishing the group in first place will be a tall
order, and second place would still be difficult. That said, President
Macky Sall recently announced he will be spending 12 days away
from the office, cheering on the team: with such dedicated away
fans, they might just be able to get over the line.
Their ability to progress in the tournament is likely to depend on the
form of their main goal-scoring threat, Sadio Mané. Having recently
scored 10 goals in the UEFA Champions League for Liverpool,
making him the tournament’s joint highest scorer, as well as scoring
in the final, a lot will rest on Mané’s first appearance at the World
Cup. While teams without strength in depth rarely outperform,
rising star Keita Baldé Diao (a recent £30m signing for Monaco) will
hope to make his mark on the tournament – and the squad is filled
with a smattering of other familiar names.
Without the usual suspects of Côte D’Ivoire, Ghana or Cameroon in
this year’s tournament, Nigeria and Senegal are the only sub-
Saharan teams to make it to Russia. If Senegal is able to proceed
past the Group stage and qualify in second place, they would likely
then face either Belgium or England in the Round of 16.
The economy is a stand-out in the region, but still has a
long way to go
Since the turn of the millennium, Senegal has experienced a
remarkable period of high growth and relatively low inflation.
Between 2000 and 2017 growth has averaged 4% – with a positive
growth rate in every year, even during the years of the Global
Financial Crisis – and inflation has averaged just +%yoy. In 2017,
Senegal achieved their highest growth rate since 1982, at %yoy.
According to IMF estimates, Senegal is expected to grow at a
similar pace in 2018, and continue growing at 6%-7%yoy over the
forecast horizon. This sustained period of strong growth follows the
implementation of the Plan Sénégal Emergent (PSE) by the
government, a policy framework focusing on structural reform, the
promotion of human capital and the improvement of governance
and rule of law. The aim of the programme is to drive the country
into the World Bank’s upper-middle-income bracket, an objective
that is likely to require growth to stay in the 7%-8% range over the
next 15-20 years. Compared with its Sub-Saharan peers, Senegal
has a relatively high credit rating and relatively strong economic
institutions.
Senegal has, however, been running twin deficits since 2005. In
2017 it ran a budget deficit of % of GDP, and the public debt
stock has risen from around 20% of GDP in 2005 to 61% of GDP,
while the current account deficit also remains wide at -9% of GDP.
The latest World Economic Forum Global Competitiveness Index
places Senegal at 106 out of 137 in the world. As with many less
developed economies, its lack of competitiveness is a structural
issue. The World Bank’s Ease of Business Index places Senegal at
140 out of 190 countries. In particular, Senegal scores poorly on its
ease of paying taxes, access to electricity and poor transport
infrastructure. The most recent IMF Article IV consultation
highlights the need to improve export quality as well if the trade
balance is to improve.
These developments pose threats to the long-term outlook.
However, the short-term outlook for the economy remains positive.
Momentum is strong and recently discovered oil is expected to go
on line in 2020-21.
Loughlan O’Doherty* and Kevin Daly
*Loughlan is an intern on the CEEMEA Economics team.
Senegal
Statistics for Senegal
Source: , FIFA Public Website
Odds: 125/1 World Ranking: 28
Date Venue Against Local Time
19-Jun Spartak Stadium Poland 18:00
24-Jun Ekaterinburg Arena Japan 20:00
28-Jun Samara Arena Colombia 18:00
Previous Appearances: 1
Host Year Outcome
Korea/Japan 2002 Quarter-finals
Previous World Cup Results
Games Played 5
Won 2
Drawn 2
Lost 1
Goals Scored 7
Goals Against 6
Yellow Cards 14
Red Cards 1
1st Round Match Schedule
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A tough group, but Serbia could be a wildcard
With its deep historical, cultural and political ties to the host of this
year’s tournament, Serbia might come closest to enjoying ‘home
advantage’ at the 2018 World Cup, and is likely to benefit from
considerable support from the local Russian fan base. Given the
group that it finds itself in – along with Brazil, Costa Rica and
Switzerland – Serbia may need these off-the-pitch factors to work in
its favour in order to raise its chances of breaking into the Round of
16. Meanwhile, Brazil is close to being a favourite to win the
tournament, Costa Rica routinely punches above its weight, and
Switzerland has made it to the knockout stages at two of the last
three World Cups.
That said, similarly to Russia, Serbia – and before that its Yugoslavia
and Serbia and Montenegro predecessor teams – has a storied
football past, with a tradition of extremely skilful players, strong
team cohesion and technically adept dribblers and passers. One
could even argue that the old Yugoslav teams were a cradle for
some of the greatest individuals ever to play the game. This year’s
tournament will be the team’s eleventh appearance at the World
Cup, including those of its predecessor teams. Most recently,
Serbia contested with Montenegro in 2006 in Germany, and then on
its own in 2010 in South Africa. While it didn’t break out of the
Group stage in 2010, it triumphantly defeated Germany in a 1-0
victory on the back of an impressive goal by mid-fielder Milan
Jovanic – a clear high point in recent Serbian football and World Cup
history.
This year, the team has a mix of old and new. Branislav Ivanovic,
now playing for Zenit Saint Petersburg, is the main holdover from
the 2010 generation that competed in South Africa, along with
fellow defender Aleksandar Kolarov. They are notably joined by the
young and up-and-coming Sergej Milinkovic-Savic in mid-field and
Aleksandar Mitrovic up front. The team has promising players and
could be a wildcard for breaking out of the group stage, but player
chemistry, rocky recent results and recent managerial changes –
with manager Mladen Krstajic only having signed on in the autumn
of 2017 – introduce many uncertainties.
Stronger recent economic performance, bolstered by
structural reforms
Like many other countries in Central and Eastern Europe, Serbia
emerged from the Global Financial Crisis and from the Euro area
debt crises bruised and exposed, with macroeconomic imbalances
including a household credit bubble, weak public finances and
significant financial sector vulnerabilities (in particular given large
Greek participation in Serbia’s banking system). Growth outcomes
were very weak from 2009-14, foreign investment was meagre and
public institutions and policy were slow to respond to the economic
challenges. In the face of these adverse macroeconomic conditions,
the Serbian authorities embarked on a precautionary IMF Stand-By
Arrangement in 2015-18, which they completed earlier this year
with flying colours (and are due to renew some form of cooperation
with the IMF in the coming months). In the context of this IMF
programme, Serbia has restored sustainability to public finances,
with primary surpluses implying that government debt is now on a
declining trajectory, and with an ambitious reform of its state-owned
enterprises as well as regulatory overhaul designed to improve its
business climate in progress.
Despite lagging CEE peers in its economic recovery, Serbia’s reform
efforts have recently borne fruit. Growth has returned to a 2-3%
range, inflation has fallen sharply enabling monetary policy easing
and creating an attractive local-currency fixed income story, and the
current account deficit has narrowed sharply. These efforts have
also earned Serbia credit rating upgrades to BB (across all three
major rating agencies) and have led to significant FDI inflows,
boosting fixed investment sharply as well as export growth.
Moreover, given that the economic recovery is still in a relatively
early stage and with more reforms underway, Serbia has yet to
realise its economic potential and it arguably remains one of the
most under-appreciated and positive reform stories among
emerging market countries. With prospects of an investment grade
credit rating and hopes of EU membership down the line (it is
currently a candidate country, with a target 2025 accession date),
the political and economic outlook for Serbia remains bright.
Andrew Matheny
Serbia
Statistics for Serbia
Source: , FIFA Public Website
Odds: 150/1 World Ranking: 35
Date Venue Against Local Time
17-Jun Samara Arena Costa Rica 16:00
22-Jun Kaliningrad Stadium Switzerland 20:00
27-Jun Spartak Stadium Brazil 21:00
Previous Appearances: 11
Host Year Outcome
Uruguay 1930 Fourth
Brazil 1950 Round 1
Switzerland 1954 Quarter-finals
Sweden 1958 Quarter-finals
Chile 1962 Fourth
Germany 1974 Round of 16
Spain 1982 Round 1
Italy 1990 Quarter-finals
France 1998 Round of 16
Germany 2006 Round 1
South Africa 2010 Round 1
Previous World Cup Results
Games Played 43
Won 17
Drawn 8
Lost 18
Goals Scored 64
Goals Against 59
Yellow Cards 46
Red Cards 5
1st Round Match Schedule
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Spain’s real GDP has grown faster than that of any other Euro area
country since 2015, making it ‘the tiger of Europe’, and one that is
likely to roar loudly at the 2018 World Cup. The Red Fury debuts
against Portugal on June 15. The two countries share Group B with
Iran and Morocco, but should be able to dominate the top two
qualifying slots comfortably.
The new team coach, Julen Lopetegui, was a surprising
appointment back in 2016, as surprising as the strength and
persistence of Spanish economic performance over the past few
years. Success in soccer came first: Spain won the Euros in 2008,
the World Cup in 2010 and the Euros again in 2012, achievements
that boosted confidence in Spain at a time of crisis. The economic
recovery came later, when an extensive liberalisation process finally
bore fruit. With real unit labour costs now only slightly above those
of Germany, Spanish international competitiveness has improved
dramatically since 2008 and Spain has increased its share in
international goods markets.
Lopetegui has revolutionised the playing style of Spain’s national
team. He prefers a more vertical game over the renowned ‘Tiki-
Taka’ introduced by Pep Guardiola and later used by Vicente del
Bosque to conquer two international titles in as many years.
Lopetegui is spoiled for choice for the required 23 players, so much
so that strong candidates such as Álvaro Morata, Cesc Fábregas,
and Marcos Alonso have been left out of the roster. Instead,
Lopetegui will count on a solid team of experienced players such as
team captain Iniesta to guide the talented rising stars towards
victory. Mid-fielders Marco Asensio and ‘Suso’ belong to the latter
camp; their dynamism mirrors the new business environment of
young, productive firms that have been created at a faster rate than
in Germany.
The Red Fury is set to debut with a 4-2-3-1 formation. The goal will
be well guarded by David De Gea, recently named the best
goalkeeper in the world, while the defence is fortified by world
champions Gerard Piqué and Sergio Ramos, idols of . Barcelona
and Real Madrid respectively. In the mid-field, well-known faces
such as those of Sergio ‘The Invisible’ Busquets, David ‘Merlin’
Silva, and Andrés ‘The Brain’ Iniesta, who are likely playing their last
World Cup, will be joined by the fresh faces of Thiago Alcántara and
Saul Ñíguez. Finally, Lopetegui will rely on striker Diego Costa to
lead the offensive.
The 2018 World Cup will unite all Spaniards under one flag and one
team, hopefully helping to clear some clouds between the central
government and disgruntled regions such as Catalonia. Even the
rivalry between . Barcelona and Real Madrid will be forgotten
over the next month as players from both teams such as Isco,
Vázquez, Asensio, Iniesta and Piqué play side by side. In parallel,
the newly appointed Socialist Prime Minister Pedro Sánchez has
shown signs of seeking a political truce as he intends to re-open
dialogue with politicians in Catalonia.
Spanish progress at the World Cup looks as good a bet as
anticipating a further sovereign upgrade. After falling down the
ratings agencies ladder, S&P, Moody’s and Fitch have
acknowledged that the government scored important goals by
reforming the banking system, making the labour market more
competitive, and reducing large government and current account
deficits. That said, graduating to the French and German level
requires a few more steps, such as the new Socialist government
maintaining the reform momentum and fiscal austerity.
Bonos-Bunds spreads have tightened fast this year, perhaps as fast
as Isco runs. Whether spreads will tighten further or not will depend
not only on Spain, but also on its ‘competitors’ playing by the rules.
Unlike in Italy, which failed to qualify for the World Cup, and where
Eurosceptics are putting Italy first, in Spain a new, liberal and pro-
European party Ciudadanos, is leading in the polls. Still, in Russia on
the football pitch, it will be Spain first!
Silvia Ardagna & Isabel Di Tella*
*Isabel is an intern on the Europe Economics team
Spain
Statistics for Spain
Source: , FIFA Public Website
Odds: 6/1 World Ranking: 8
Date Venue Against Local Time
15-Jun Fisht Stadium Portugal 21:00
20-Jun Kazan Arena Iran 21:00
25-Jun Kaliningrad Stadium Morocco 20:00
Previous Appearances: 14
Host Year Outcome
Italy 1934 Quarter-finals
Brazil 1950 Fourth place
Chile 1962 Round 1
England 1966 Round 1
Argentina 1978 Round 1
Spain 1982 Round of 16
Mexico 1986 Quarter-finals
Italy 1990 Round of 16
USA 1994 Quarter-finals
France 1998 Round 1
Korea/Japan 2002 Quarter-finals
Germany 2006 Round of 16
South Africa 2010 Winners
Brazil 2014 Round 1
Previous World Cup Results
Games Played 59
Won 29
Drawn 12
Lost 18
Goals Scored 92
Goals Against 66
Yellow Cards 64
Red Cards 1
1st Round Match Schedule
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After Zlatan
Despite superstar Zlatan Ibrahimovic’s exodus from the national
football team in 2016, rumours of his potential return surfaced
around six months ago. But in April it was announced that Zlatan
would not be returning for the World Cup. Where does this leave
the Swedish team? Does the Scandinavian spirit of cooperation and
teamwork make up for the loss of star appeal?
The 4-4-2 system and tactics under manager Jan Andersson hark
back to the relatively successful period during the tenure of Lars
Lagerback in the first decade of the 2000s. But whereas back then
players came from clubs such as Arsenal, Juventus and Barcelona,
they now tend to come from lesser-known clubs from countries like
Denmark, Greece, Russia, Scotland and the UAE. No single name in
the current team comes close to matching the star status of Zlatan.
But Sweden’s qualification to the World Cup was undoubtedly an
accomplishment: it finished second in a group containing
heavyweights France and the Netherlands. This led to a play-off
with three-times World Cup winners Italy. With a performance that
displayed impressive teamwork, Sweden beat Italy (1-0, 0-0) to
secure its place in the World Cup.
Sweden is currently placed in 23rd place in FIFA’s rankings, behind
fellow Nordic neighbours Denmark and Iceland, and making it
something of an underperformer among its peers. At the Group
stage, Sweden faces stiff competition from Germany, Mexico and
South Korea. We think Sweden has a good chance of progressing
beyond the Group stage by securing the second spot after
Germany. Sweden’s past glories at the World Cup include reaching
the final in 1958, when it lost to Brazil fielding a young Pelé.
Sweden’s most recent success includes reaching the Semi-finals in
1994. Matching this performance and progressing much beyond the
first knock-out match seems unlikely for Sweden at this World Cup:
for this, it would need both the teamwork and star quality of the
likes of Zlatan.
The economy – a robust recovery but risks remain
The Swedish economy has displayed Zlatan-like quality when
rebounding from crises: Swedish GDP grew close to +6% in 2010
following the global financial crisis, and averaged close to +3½%
per year over past three years as echoes of the Euro area debt crisis
faded.
As a small open economy, Swedish growth is highly dependent on
European and global growth. Domestic conditions have also been
good, with private consumption and investment proving strong on
the back of rising employment, low interest rates and wealth gains.
Asset prices have risen, including for houses, and reached very high
levels last year. That said, house prices starting falling last year, and
are down around 10%. While we expect the strong economic
growth and high employment to keep house prices from falling
much further – and price developments so far this year provide
some reassurance on this – risks of a sharper housing correction
remain. High household debt and high house prices have left
Sweden vulnerable to corrections. A global recession could hit
Sweden hard. Further house price declines could severely
exacerbate the bite of a recession. In our base case of continued
robust global growth, we expect the Swedish economy to do well,
even if growth is gradually losing pace on the back of falls in
housing activity and little remaining slack in the economy.
Inflation has been low in Sweden in recent years, but headline
inflation averaged its target last year of 2%. Part of this reflects
energy prices and underlying inflation remains somewhat lower.
With continued declines in labour market slack, we expect gradual
gains in inflation. Yet low inflation abroad – including subdued wage
and price pressures from Germany – implies inflation will likely rise
only slowly. While still some time away from its first hike since
2011, the Riksbank is moving closer to raising rates again. That said,
future rate increases are likely to be slow and gradual compared
with past hiking cycles.
Lasse Holboell W. Nielsen & Erik Meyersson
Sweden
Statistics for Sweden
Source: , FIFA Public Website
Odds: 80/1 World Ranking: 23
Date Venue Against Local Time
18-Jun Nizhny Novgorod Stadium Korea Republic 15:00
23-Jun Fisht Stadium Germany 21:00
27-Jun Ekaterinburg Arena Mexico 19:00
Previous Appearances: 11
Host Year Outcome
Italy 1934 Quarter-finals
France 1938 Fourth place
Brazil 1950 Third place
Sweden 1958 Runners-Up
Mexico 1970 Round 1
Germany 1974 Round of 16
Argentina 1978 Round 1
Italy 1990 Round 1
USA 1994 Third place
Korea/Japan 2002 Round of 16
Germany 2006 Round of 16
Previous World Cup Results
Games Played 46
Won 16
Drawn 13
Lost 17
Goals Scored 74
Goals Against 69
Yellow Cards 38
Red Cards 3
1st Round Match Schedule
Won Drawn Lost
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Easy policy, easy winning
Switzerland’s performance at past FIFA World Cup finals has often
been said to mirror national cultural stereotypes. Die Schweizer
Nati’s performances have been defined by meticulously planned,
but stolidly defensive, displays which have prioritised conservatism
over flair. The results have been reliably good for a small European
country, but never spectacular.
Switzerland have qualified for 11 of the 21 World Cup finals held to
date (including four of the past seven), but have failed to make their
way past the Round of 16 since 1954. In the 2010 World Cup,
which typifies the Swiss character, the team achieved the unlikely
feat of escaping the Group stage while scoring only a single goal.
Unlike other small European footballing nations, such as Belgium or
Sweden, Switzerland has not cultivated any footballing superstars.
The approach of the Swiss Football Association mirrors that of other
key national institutions, such as the Swiss National Bank. While other
financial centres have produced central bankers with international
profiles that rival those of sporting superstars, Swiss central bankers
have preferred to defend their anonymity. Gradualism and reliability
have tended to reap greater rewards in economic policy than in
football. The policymakers have outperformed the footballers by
some distance. Inflation has averaged a healthy %yoy since
Switzerland’s first World Cup in 1934, and Switzerland has the third-
highest living standards in the world, according to the UN.
An institutional culture that produces a reliably robust economy and
reliably boring football has, until recently, been an acceptable trade-
off for the sensible Swiss populace. But this is changing. Global
events have forced the old monetary policy model to adapt after the
global and European crises. The result has been a series of
uncharacteristically bold monetary policy moves, and the injection of
a certain level of flair. The SNB has expanded its balance sheet by
600% since 2008, and runs the world’s lowest negative interest
rates. The removal of the CHF floor in 2015 was one the most
significant events in recent financial history.
While this new paradigm may make Swiss finance less predictable,
it has boosted die Nati. In all games relating to the World Cup or
Euros, Switzerland has improved its win ratio markedly, from a
historical average of 30%, to 70% over the past four years. In 2017,
Switzerland were undefeated, and ascended to their highest ever
FIFA ranking (6th). Easy policy has delivered easy wins. On our
forecasts, this trend will continue to June.
If the institutional analysis is not convincing, the data don’t lie. The
exhibit shows a (very) rough and (extremely) dirty Markov-switching
model characterisation of flight-to-safety regimes, defined as
periods in which CHF appreciates and displays heightened volatility.
Historically, there has been no correlation between demand for the
Franc and the performance of the national team. However, in recent
years, we have seen a remarkably rapid coupling of flight to safety
regimes with the ratio of goals scored vs goals conceded by
Switzerland. This suggests the football team is synching up with the
economy, rather than with the (slow-moving) national culture. The
recent flight-to-safety event triggered by Italian political uncertainty
was well-timed for the World Cup.
Moreover, there is a robust correlation between Swiss watch
exports and the nation’s win ratio in football. While the long-term
outlook for the Swiss watch industry is threatened by the growth of
the smart devices industry, short-run prospects remain bright, and
we can expect the wins to keep on rolling.
As the old market chestnut goes, one correlation is a fluke, two are
a trade. This World Cup, ‘buy’ Switzerland.*
*Disclaimer: Past performance is not a reliable indicator of future
performance. The value of an investment linked to the performance
of the Swiss National Team can go down as well as up.
Dylan Smith
Switzerland
FX regimes and goal ratio
0
1
2
3
4
5
6
7
8
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
Switzerland: Goals scored as a proportion of goals conceded (left axis)
Probability that CHF is in a flight to safety regime (right axis)
Source: Bloomberg, Goldman Sachs Global Investment Research
Statistics for Switzerland
Source: , FIFA Public Website
Odds: 100/1 World Ranking: 6
Date Venue Against Local Time
17-Jun Rostov Arena Brazil 21:00
22-Jun Kaliningrad Stadium Serbia 20:00
27-Jun Nizhny Novgorod Stadium Costa Rica 21:00
Previous Appearances: 10
Host Year Outcome
Italy 1934 Quarter-finals
France 1938 Quarter-finals
Brazil 1950 Round 1
Switzerland 1954 Quarter-finals
Chile 1962 Round 1
England 1966 Round 1
USA 1994 Round of 16
Germany 2006 Round of 16
South Africa 2010 Round 1
Brazil 2014 Round of 16
Previous World Cup Results
Games Played 33
Won 11
Drawn 6
Lost 16
Goals Scored 45
Goals Against 59
Yellow Cards 31
Red Cards 1
1st Round Match Schedule
Won Drawn Lost
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Will injuries clip the Eagles’ wings?
The Eagles of Carthage face a daunting task in Russia. Drawn into a
difficult group, the Eagles open their campaign against England and
Belgium before meeting Panama in their final match of the Group
stage. Tunisia’s task became even more daunting this spring when
their talisman and primary goal scorer Youssef Msakni tore a
cruciate ligament in a club match, ruling him out for Russia. The
Eagles’ manager, Nabil Maaloul, had previously said that Tunisia
entering the World Cup without Msakni would be akin to Argentina
without Messi, but little did he know his great fear would come
true. The team’s injury-related woes were compounded last month
when a muscle problem kept their secondary goal threat, Taha
Yassine Khenissi, out of the World Cup squad.
In Msakni’s absence, Tunisia will likely rely on their resolute mid-
field. Their dynamic trio of Ferjani Sassi, Mohamed Amine Ben
Amor and Ghaylen Chaaleli will look to frustrate their English and
Belgian counterparts in the centre of the park with their industry and
energy. The Eagles’ comeback from two goals down to draw
against Portugal in a recent friendly demonstrated their fighting
qualities and proved that they pose an attacking threat even without
Msakni and Khenissi. Given their already depleted squad, Tunisia
will hope that lingering fitness concerns don’t deprive them of any
more key members of their World Cup squad.
While they undoubtedly enter their 2018 group as an underdog, the
Eagles have a history of big performances on the international
stage. In 1978, Tunisia became the first African side to win a World
Cup match when they came from behind to beat Mexico 3–1 (while
also holding defending champions West Germany to a goalless
draw in the same tournament). During a sustained period of
international success, they qualified for three consecutive World
Cups between 1998 and 2006, and won the 2004 Africa Cup of
Nations. After a slump that saw them miss the last two World
Cups, the national team has seen a resurgence in recent years, and
Tunisia will travel to Russia ranked 14th by FIFA, their highest-ever
world ranking.
State of the nation and the economy: encouraging signs in
tough times
Tunisia became a symbol of hope as the seat of the Arab Spring in
2011, but the intervening years have yet to bring prosperity for the
Tunisian people. The Tunisian economy has deteriorated in recent
years as the nation struggles with the transition towards democracy
and turmoil in neighbouring Libya, one of Tunisia’s primary trading
partners. Public expenditures and the civil service wage bill have
roughly doubled since 2011, while economic growth is stalled
below 2%. Tourism, one of the nation’s largest industries, has
suffered due to political instability and terrorism, and the World
Bank reports that more than 35% of Tunisians aged 15 to 24 are
unemployed.
Attempts at economic reform haven’t helped. In the past few years
Tunisia has sought to increase international competitiveness by
devaluing the Dinar. This currency devaluation, however, has only
widened Tunisia’s trade deficit, creating a vicious cycle of Dinar
devaluation. The IMF estimates that Tunisia’s current account
exceeded 10% of GDP in 2017. Moreover, the 2018 government
budget included tax increases and a public sector hiring freeze in an
attempt to rein in public finances, but these austerity measures
have hurt incomes and raised unemployment. The budget also
imposed price increases, which have sparked inflation concerns
with the rate of inflation in Tunisia expected to reach the low double
digits in 2018.
Recent developments point to some encouraging signs, however.
The Tunisia government has shown a commitment to fighting
terrorism, which should help the struggling tourism industry, and
the weak Tunisian Dinar offers a comparative advantage in
attracting foreign investment. Moreover, earlier this year, the
government dismissed the governor of the Tunisian central bank
and installed the widely respected economist Marouane El Abassi, a
promising apolitical appointment. El Abassi, along with his former
colleagues at the World Bank, published a recent report on the key
challenges facing the country that many hope will represent an
economic turning point as the country progresses towards a stable
democracy.
James Weldon and Lotfi Karoui
Tunisia
Statistics for Tunisia
Source: , FIFA Public Website
Odds: 500/1 World Ranking: 14
Date Venue Against Local Time
18-Jun Volgograd Arena England 21:00
23-Jun Spartak Stadium Belgium 15:00
28-Jun Mordovia Arena Panama 21:00
Previous Appearances: 4
Host Year Outcome
Argentina 1978 Round 1
France 1998 Round 1
Korea/Japan 2002 Round 1
Germany 2006 Round 1
Previous World Cup Results
Games Played 12
Won 1
Drawn 4
Lost 7
Goals Scored 8
Goals Against 17
Yellow Cards 28
Red Cards 1
1st Round Match Schedule
Won Drawn Lost
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Small country, big winner
Despite being a small country with a population of just million
(as of 2016), Uruguay has a successful and proud football heritage,
as one of only eight nations ever to win the World Cup. La Celeste –
the national team’s moniker (after the sky blue color of the flag and
team shirt) – won the world title in 1930 and 1950, as well as
several other international titles, including the Olympics and the
Copa América. In fact, with 20 trophies, Uruguay holds the world
record for the most international football titles held by any country.
This history of success has had its ups and downs. After 1970, the
team’s dominance and quality declined significantly, reaching an all-
time low 76th place in the FIFA World Ranking, and it failed to
classify for several World Cups (1978, 1982, 1994, 1998 and 2006).
However, a new generation of players rose to prominence in the
late 2000s – namely strikers Diego Forlán, Luis Suárez and Edinson
Cavani, among others. Coupled with the leadership of Oscar “El
Maestro” Tabárez, who returned as head coach of La Celeste in
2006, these players formed a team widely considered the best in
the past several decades, finishing in fourth place at the 2010 World
Cup and winning the 2011 Copa América.
In Russia 2018, the Uruguayan squad will include many of these
star players and will be looking to improve on its performance in
Brazil 2014, where the team was eliminated in the Round of 16.
After a solid campaign in the South American qualifiers, where
Uruguay was placed 2nd behind Brazil, El Maestro Tabárez is aiming
to steer La Celeste into the latter stages of the competition with the
help of the team’s confidence and focus – the famous garra charrúa
(tenacity of the Charrúas, the indigenous people who fiercely
resisted the Spanish in the 1500s). Facing a group that includes
Russia, Saudi Arabia and Egypt, based on past form La Celeste
should easily qualify to the knockout stages with the help of the
defensive prowess of veteran captain Diego Godín, a youthful and
energetic midfield, and one of the world’s best offensive duos in
Suárez and Cavani. If the plan is to win the World Cup, however,
Uruguayans should hope that Luis Suárez doesn’t repeat his red-
card suspensions from 2010 and 2014, and is available as its leading
goal-scorer to lead his nation to victory.
Stability in an unstable region
The recent renaissance of Uruguayan football pales in comparison
to the economic rebound experienced since the 2002 crisis, with
the economy expanding for 15 consecutive years. After a decade-
long period of sustained economic growth based on sound macro
policies and successful institutional reforms, Uruguay earned the
investment grade ‘triple crown’ from the three largest credit rating
agencies in 2012. It also enjoys broad political stability and a robust
democracy in a region where democratic institutions are often
tested by economic mismanagement, corruption and public security
issues. Indeed, it is the only Latin American country to rank as a
“full democracy” according to The Economist’s Democracy Index.
Uruguay enjoyed a cyclical recovery in 2017, with GDP growing by a
solid %, up from % in 2016 and % in 2015. Growth is
expected to remain robust in 2018 at %, according to the
Bloomberg consensus forecast. While the labor market remains
weak, unemployment has been declining and a tighter monetary
policy stance coupled with an appreciating exchange rate in 2017
and early 2018 brought inflation down into the target range of 3%-
7% for the first time in seven years. The government is also
delivering on a needed fiscal adjustment, and committed to meet
the challenging fiscal deficit target of % of GDP in 2019.
If the football rivalry with its two big neighbors – Argentina and
Brazil – were extended to the recent growth performance, Uruguay
would win against both. But, off the field, its fate is largely linked to
the performance of its two largest economic partners, and the slow
recovery in Brazil and correction of external imbalances in Argentina
pose a risk to Uruguay’s outlook. That said, the Uruguayan economy
is less vulnerable to international volatility than it has been in the
past, as it enjoys a current account surplus, a comfortable
international reserves position equivalent to 30% of GDP, and lower
levels of dollarisation.
Gabriel Fritsch
Uruguay
Statistics for Uruguay
Source: , FIFA Public Website
Odds: 25/1 World Ranking: 17
Date Venue Against Local Time
15-Jun Ekaterinburg Arena Egypt 17:00
20-Jun Rostov Arena Saudi Arabia 18:00
25-Jun Samara Arena Russia 18:00
Previous Appearances: 12
Host Year Outcome
Uruguay 1930 Winners
Brazil 1950 Winners
Switzerland 1954 Fourth place
Chile 1962 Round 1
England 1966 Quarter-finals
Mexico 1970 Fourth place
Germany 1974 Round 1
Mexico 1986 Round of 16
Italy 1990 Round of 16
Korea/Japan 2002 Round 1
South Africa 2010 Fourth place
Brazil 2014 Round of 16
Previous World Cup Results
Games Played 51
Won 20
Drawn 12
Lost 19
Goals Scored 80
Goals Against 71
Yellow Cards 60
Red Cards 9
1st Round Match Schedule
Won Drawn Lost
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W ill the recent uptick in global rates mean more goals in the World Cup final?
Teams have become more risk-averse in the World Cup final over time. The number of goals scored in the match used to be 4-5 during
the 1970s and the 1980s, but has declined to 1-2 over the past decade. This ‘safety-first’ attitude has been mirrored by the preference for
safe assets such as US government bonds and the long decline in UST yields over the same period. Will the recent uptick in global rates
and the narrative of a bond bear market mean we see more goals in the 2018 Final?
2
3
4
5
6
7
8
9
10
11
0
1
2
3
4
5
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
Number of goals
scored in World Cup
final (left)
10-year US Treasury
yield (right, %)
Source: FIFA, Haver Analytics, Goldman Sachs Global Investment Research.
A more diverse backdrop, in football and in the economy
As the composition of global GDP has become increasingly diversified, so has the World Cup tournament included a rising number of
teams from non-American/European regions. While more than 30% of the participants now come from Asia and Africa, only Latin
American and Western European teams have managed to lift the trophy so far.
0
5
10
15
20
25
30
35
40
45
0
5
10
15
20
25
30
35
40
1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
Proportion of non American/European
countries participating in the World Cup
(left)
Weight of non American/European
countries in global GDP (right)
% %
Source: FIFA, Haver Analytics, Goldman Sachs Global Investment Research.
World Cup trends viewed through a (light-hearted) economic lens
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E fficiency matters: more productive countries tend to perform better
Is the concept of ‘productivity’ applicable to football? And if so, does it relate to productivity in the overall economy? The answer to both
questions appears to be ‘yes’. We find a positive relation between output per worker in a given country and the proportion of matches
won in all World Cup editions for the respective national squad. The conspicuous exception is Brazil, where despite the relatively low level
of economic productivity, World Cup productivity is the highest in the sample (almost 70%).
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
0 10 20 30 40 50 60 70
Germany
Brazil
ItalyEngland
Spain
France
Mexico
Netherlands
Russia
Switzerland
USA
Japan
Peru
Algeria
Morocco
Australia
Tunisia
Argentina
Percentage of matches
won in all WC editions (%)
Productivity
(1980-2014
average,
2011 Intl$)
Source: FIFA, Haver Analytics, Goldman Sachs Global Investment Research.
G oing it alone: more offside calls where mutual trust is lower
Facing an organised defence is certainly the easiest way for a striker to get caught offside. But ending up ‘beyond the enemy lines’ more
frequently as a strike force may suggest there is an impulse to ‘go it alone’ rather than attack as a mutually reinforcing group. Indeed, the
number of offside calls per attacking action for each team in the 2014 World Cup was closely correlated with the level of mutual trust
reported by the World Value Survey for the respective country.
0
10
20
30
40
50
0 2 4 6 8 10 12 14
Argentina
Brazil
Germany
Netherlands
France
Colombia
Chile
Switzerland
Ghana
Japan
England
UruguayMexico
Russia
Spain
USA
Korea Republic
Algeria
Australia
Iran
Number of offside calls per
attack in 2014 World Cup (%)
Level of mutual trust (% across respondents)
Source: FIFA, World Value Survey, Goldman Sachs Global Investment Research
Note: Mutual trust measured as percentage of positive answers to question – “Would you say that most people can be trusted?” in 2014 World Value Survey
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F ootball (almost) always requires a sunny climate
Back in 2014 we showed how the availability of land may be a key determinant of countries’ performance in the World Cup. This year we
focus again on the role of geographic factors and show that temperature may also play a crucial role when it comes to making it to the
Final. This time Germany is the noticeable exception, with a record 8 World Cup finals but an average temperature of less than 9 degrees.
0
5
10
15
20
25
0 1 2 3 4 5 6 7 8
Uruguay
Argentina
Italy
Czech Republic
Hungary
Germany
Brazil
Netherlands
Sweden
France
Spain
England
Number of times in
World Cup final
Average temperature, 1930-2015
(Celsius degrees)
Source: FIFA, World Bank, Goldman Sachs Global Investment Research
I t’s all about accuracy: where central banks and penalty shooters don’t miss the “target”
Conducting monetary policy and kicking a penalty are clearly different endeavours, yet both require cold blood and hard training. Indeed,
we find a strong correlation between the ‘success rate’ of penalty shooters and central bankers across countries. Achieving an inflation
target and scoring a World Cup penalty both seem to be largely a matter of accuracy.
20
40
60
80
100
0 1 2
Absolute
deviation from
inflation target
(%)
Belgium
Paraguay
South Korea
Germany
Sweden
France
Greece
Japan Brazil
Spain
Ireland
Netherlands
Italy
Portugal
England Ghana
Chile
Mexico
Penalty shoot-out success rate in World Cup history (%)
Source: Planet World Cup, Haver Analytics, Goldman Sachs Global Investment Research
Lorenzo Incoronato
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Disclosure Appendix
Reg AC
We, Jan Hatzius, Kamakshya Trivedi, Nicholas Fawcett, Manav Chaudhary, Lorenzo Incoronato and Jari Stehn, hereby certify that all of the views
expressed in this report accurately reflect our personal views, which have not been influenced by considerations of the firm’s business or client
relationships.
We, Goohoon Kwon, CFA and Irene Choi, hereby certify that all of the views expressed in this report accurately reflect our personal views about the
subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related
to the specific recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs’ Global Investment Research division.
Each country economist has certified as follows: I, name of economist, hereby certify that all of the views expressed in this report accurately reflect my
personal views, which have not been influenced by considerations of the firm's business or client relationships.
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June 2018 The World Cup and Economics 2018
Goldman Sachs Global Investment Research 44
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