Swiss Are World Sports Champs…When It Comes to GDP

When it comes to economic statistics, economists love “core” readings. These strip out volatile factors to give a cleaner picture on underlying trends.

That’s why we have core inflation readings that strip out food and energy prices. And retail sales that exclude automobiles. Or durable goods excluding transportation.

Switzerland has taken this a step further by reporting gross domestic product excluding…sports?

That’s right. The Swiss economics ministry reported that first-quarter gross domestic product rose a solid 0.6% on a quarterly basis, or 2.2% from the same period a year ago. But it also said that, excluding sporting events, GDP grew a more modest 0.4% on a quarterly basis.

It isn’t that Switzerland is particularly sports crazed. Rather, it is home to a lot of international sports organizations like the International Olympic Committee and International Federation of Association Football, known as FIFA, which organizes soccer’s World Cup. The association in charge of the European soccer championship is also based in Switzerland.

These bodies generate license fees the years that the games take place., income that adds to GDP. “In years with major sporting events, GDP growth is positively affected (e.g. in 2014, when Olympic winter games and the FIFA World Cup took place, or 2016, when Olympic summer games and the European Football Championship took place) but then falls in subsequent years as the value added associated with such events disappears,” the Swiss economics ministry said in a report explaining the sports effect. “This multiannual cycle can make it difficult to analyze, model and forecast business cycle developments.”

And this year is set up for a particularly strong effect because the Olympics and World Cup occur in the same year, something that only happens every four years. This could also affect next year’s Swiss GDP numbers when these fees don’t materialize.

But for now, Switzerland is the winner no matter how many medals they won in Pyeongchang and even if they don’t raise the World Cup trophy in Russia this summer.

from Real Time Economics https://ift.tt/2J3WkwM