World Cup falls short of boosting Mexico

The World Cup left stadiums packed and millions of fans euphoric in Mexico, but failed to lift a sluggish economy weighed down by weak investment.

Uncertainty also looms over the upcoming review of the North American trade agreement (USMCA). The tournament ends Sunday after more than a month of matches across Canada, the United States, and Mexico.

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Mexico hosted 13 of 104 games. However, it fell short of ambitious official tourism targets aimed at boosting gross domestic product (GDP), which contracted in the first quarter.

Humberto Calzada, chief economist at Rankia, commented on the situation. He said the World Cup will not structurally change the trajectory of the Mexican economy.

Calzada noted the tournament offers only a short-term stimulus for an economy the government expects to grow between 1.8 percent and 2.8 percent this year, compared to analysts’ forecasts of 1.1 percent.

The economic impact was highly localised. Banorte lowered its estimate of the World Cup’s GDP contribution to 0.4 percent-0.5 percent, down from a previous forecast of up to 0.62 percent.

Banamex calculated the total economic impact at 2 billion dollars. This represents about 0.1 percent of GDP and less than half of the 5.6 billion dollars Mexico received in remittances in May alone.

Deloitte projected the competition created 100,000 temporary jobs, 10 percent fewer than its previous estimate.

Meanwhile, BBVA reported its household consumption indicator fell 0.2 percent month-on-month in June. Spending on hotels was down 10.5 percent and restaurants down 4.9 percent, despite a 16.5 percent spike in entertainment.

The benefits were uneven across the host cities of Mexico City, Guadalajara, and Monterrey. The Mexican Restaurant Association reported that half of its establishments performed worse than in a typical week.

This was due to low hotel occupancy and local protests in the capital. Air travel data was also mixed.

Passenger traffic rose slightly in June in Guadalajara and Monterrey but fell at Mexico City’s main airport.

Analysts say the main driver of the Mexican economy remains outside the stadiums: trade certainty under the USMCA.

With companies holding back investment ahead of the trade pact’s review, and the economy contracting 0.6 percent in the first quarter, the IMF recently trimmed Mexico’s growth forecast to 1.2 percent from 1.6 percent.