The economic benefits of the Rugby World Cup may have been wildly overestimated by the tournament's backers, a senior academic said yesterday as the Reserve Bank hosed down expectations of a $700 million boost to the economy.
The Reserve Bank yesterday published a paper on the macroeconomic impact of the
cup in which it set out the assumptions underpinning its February estimate of $700 million in spending by visitors. The Reserve Bank has stuck with its $700 million estimate despite expected visitor numbers rising from 85,000 to 95,000, citing such factors as the strength of our dollar.
While the $700 million figure has been used by the Government as an indicator of the tournament's economic returns, the paper's author, Adam Richardson, said although that sum was equivalent to 1.4 per cent of New Zealand's annual gross domestic product, economic activity would not be boosted by that amount. Some of that spending would have occurred anyway by tourists who would now be "crowded out" by cup visitors. While cup spending by New Zealanders themselves would be significant, the extra boost to the economy would depend on factors such as limits on disposable income.
"Spending related to the tournament may just offset spending on other activities."
Mr Richardson said it was difficult to quantify any impact hosting the tournament would have on consumer confidence, "which could potentially increase general domestic spending".
