While you were watching… the 2014 World Cup

July 15, 2014

The 2014 FIFA World Cup

Germany – 2014 World Cup Champions

Congratulations to Germany on what has turned out to be a most fascinating World Cup to watch. More goals in the group stages, records broken, tipped winning teams out, underdogs climbing, and villains and heroes made.

Germany, which has remained one of the strongest and most consistent teams leading up to and during the tournament also beating the host team by 6 goals in the semi-finals. The grand final saw Germany beat Argentina in the grand final with extra time by one goal.

The World’s Game

It has been said that football is the great sporting equalizer across the world. A simple game which needs nothing more than a ball and a field. It is the most internationally and widely watched sporting event, with national teams recognized at the top echelons unlike in any other sporting tournament.

In the weeks throughout the Cup, we’ve been comparing these world games to the world games of each nation’s economy and currency. What if there was a World Cup based on each nation’s economic health?

Inspired by the Wall Street Journal’s ‘The World Cup of Everything Else’, we decided to put the data together to see how the World Cup would actually play out if were dependent on each world nation’s economy.

Australia – 2014 Economic World Cup Champions

The Socceroos may have lost out in the Group Stages of the World Cup but it looked like Australia would have taken out the World Cup if it were based on economic health. Like this year’s football World Cup, there were actually quite a few surprises and many that actually compared similarly to their football efforts.

Looking at the chart below, the group stages puts our 32 teams through a test of Real GDP Growth1. Just like this year’s Cup, Spain and England lost out and do not advance. By next World Cup though, this should change, especially with England’s showing great signs of economic and housing growth this year. The country who had experienced the largest real growth in the last year was actually Ghana at 7.9%. Ghana is the fastest growing economy in Africa with impressive energy conservation goals, exportation numbers and employment numbers.

Economics of 2014 World Cup | MXT GlobalThe 2014 World Cup of Economics. Sources: Please see list below/ Results: Full results at each round available here

 

Taking it to the Round of 16, we look at the Budget Deficit/Surplus in relation to GDP and according to the World Book2, Brazil was actually in surplus by 1.6%. How much was dependent on the estimate takings from World Cup tourism will be interesting to compare to when the results post-World Cup do roll in.

The quarter finals sees the teams fight it out on Gross National Savings to GDP3. In this match up, Australia trumps the host nation by 7.573% of more national savings whilst the top performer was actually Algeria with 47.68% of savings to GDP – largely accumulated from oil stabilization fund (FRR). With those levels of savings, one has hopes that it will be widely invested back into the nation, especially seeing that 23% of their citizens are living below the poverty line.4

The semi-finals of the economic World Cup looks at government debt in relation to GDP5. Here Australia and Algeria trumps again over opponents Colombia and Nigeria, respectively. Colombia’s government had the greatest owing debt percentage at 31.8% whilst Algeria sat on top with 9.21%.

Australia and Algeria, (albeit the most unlikely finalists in the football World Cup), are the two grand finalists in the Economics World Cup. Algeria has the potential to be more economically sound with future investment prospects, yet it is Australia’s steady move across each stage that sees it triumph in the end. It is a tight battle ground with inflation, where Algeria’s latest recording in May saw inflation as low as 1.71 yet the nation has been unstably fluctuating in the last four years, reaching highs of 11% in April, 2012. Greatly in large thanks to the RBA, Australia’s current inflation rate is stable within targets of 2.9%. Between 2009 – 2013, Australia’s annual inflation rate of 2.4% is envy-worthy against Algeria’s 3.3%.6 Australian economics has proven to be stable grounds, virtually coming out unscathed in the GFC and European crisis.

And so, the 2014 World Cup champions is Australia. We can only hope, right?

Congratulations again to the actual winners of the World Cup – Germany- and we hope you have enjoyed our series on football, finance and economics, ‘While You Were Watching‘. Its been fascinating to follow such an international event whilst being able to combine our love of watching the markets. Now that it looks like volatility has returned, we wish you fruitful trading.


Please note: England’s results were gathered from sources below as United Kingdom.
 
1. Countries by Real GDP Growth Rate, Wikipedia, 2014
2. Budget Deficit to GDP, CIA World Book, 2014
3. Gross National Savings of GDP, Economy Watch, 2014
4. Economy of Algeria, Wikipedia, 2014
5. Government Debt to GDP, Trading Economics, 2014
6. Annual Inflation CPI, The World Bank Data, 2014


About MXT Global
MXT Global (MXT) is a financial services provider that aims to offer the best combination of customer service, online Forex trading technology and the tightest spreads in the market. We offer Australian and international traders access to popular trading platforms such as MetaTrader 4 (MT4), both PC and Mac, and desktop-free solutions such as mobile and Webtrader. MXT Global Pty Ltd (MXT) ACN 157 768 566 is regulated as a financial services provider by the Australian Securities and Investments Commission (ASIC) under Australian law (AFSL 428901).

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