Russia risks losing the 2018 World Cup... and that would actually be a good thing

There’s a small chance that Russia could lose their right to host the 2018 World Cup now that FIFA’s Sepp Blatter is out as president.

Bank of America Merrill Lynch’s Vladimir Osakovskiy estimated that the total cost of the event would pump around $US50 billion in to the economy.

But losing the World Cup could actually end up being a good thing for the country.

As Osakovskiy writes in a research note:

“Overall, we think if WC 2018 in Russia were cancelled it would likely have minimal impact on projected GDP dynamics as a large part of the planned public investment spending would still be made. Moreover, we think that apart from the negative sentiment, it could in fact be positive for Russian [local currency bonds] and [hard currency bonds] as despite the likely unchanged overall spending the government could be more flexible in any new investments projects, potentially redirecting them towards more profitable ones. This could be increasingly important, given the considerable tightening of fiscal policy in the next 2-3 years.”

Indeed, World Cup infrastructure is often a money loser as these these massive stadiums are often mothballed. That being said, the likelihood that Russia will lose the cup is pretty low right now.

“Given that Blatter is due to remain in his position until the election of a new president, i.e. at least until early 2016, we think that a re-vote just 2 years before the event is unlikely,” writes Osakovskiy.

Although, depending on how the ongoing investigation plays out, anything is possible.

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