2024-07-10 05:38:44
With two weeks to go until the opening ceremony on the Seine, the French National Institute of Statistics (INSEE) has taken a risk: national statisticians estimated on Tuesday that hosting the Olympic and Paralympic Games in France should lead to an additional 0.3 percentage points of GDP growth in the third quarter.
“The impact of ticket revenues and broadcasting rights will be around +0.25 percentage points of GDP, to which should also be added the knock-on effects, in particular on tourism (accommodation, restaurants and transport), as well as bonuses for civil servants. The economic impact during the “Olympic period” is more “uncertain” but might bring an additional quarterly growth of 0.05 percentage points, the National Institute of Statistics and Economic Studies (Insee) said in its latest economic report.
Overall, GDP will grow by 0.5% in the third quarter and by 1.1% for the full year 2024. INSEE added that “economic activity will slow towards the end of the year,” with a 0.1% contraction in gross domestic product (GDP) expected in the fourth quarter.
The influence is comparable to that of the London Olympics
The economic impact of the Olympics (July 26-August 11) and Paralympics (August 28-September 8) will therefore be comparable to the London Olympics, which boosted the UK economy by 0.2 to 0.4 percentage points in 2017. The total grew 1% in the third quarter of 2012.
While economists are often reluctant to compare the impact of different versions of the Olympics, INSEE sees similarities between the 2012 and 2024 Games, with “London and Paris being two of Europe’s major capitals with developed tourism economies and a mature urban infrastructure”. The statistics agency, on the contrary, rejects “less relevant” comparisons with the 2016 Rio Olympics or the 2021 Tokyo Olympics.
For the Paris Olympics, most of the growth was driven by ticket sales (+0.15 percentage points of GDP, or €1.2 billion in revenue for the organizing committee) and broadcasting rights (+0.1 percentage points of GDP, or €750 million in revenue), which INSEE chose to record in the third quarter.
Very timely support
INSEE explains that even if the sales of Olympic tickets start from 2023, they are actually measured “at the time when the public consumes the tickets”, that is, during the Olympic and Paralympic Games. The same logic applies to broadcasting rights. According to its forecasts, the support for French economic growth from the 2024 Olympics will be only very temporary and will not be repeated in the fourth quarter.
Although the event should lead to increased consumption in certain sectors (accommodation, restaurants, transportation), the impact on growth in the third quarter will be negligible.
INSEE uses the example of television purchases, which sometimes increase during major sporting events such as the soccer World Cup. These purchases certainly support consumption, but they often come at the expense of other spending, offsetting their beneficial effects on growth.
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