Poland in the finals of Fifa World Cup! We have strong proof

13.06.2018 11:46|Marcin Lipka

It all begins with a month of football excitement and the biggest football fan festival for the last four years. How will our footballers get on? We compared the economic conditions of 32 finalists of the World Cup in Russia and the results were surprising. Poland went far. Is it a good omen?” writes Marcin Lipka, Conotoxia Senior Analyst.

Tabela

Goldman Sachs estimates in his forecasting model that the Polish football players will go out during the knockout stage. Nomura bank is more optimistic in its predictions, which foresee Poland as being the black horse of the World Cup, but it will lose with Brazil in the fight for third place.

How about playing the World Cup in a different way

We, not getting in football experts’ way, decided to play the FIFA Cup differently. On the basis of economic indicators we have assessed the chances of all 32 countries that will play at the Russian World Cup.

In the group phase, we focused on the achievements of individual countries during a period starting from the last World Cup until 2018. These included average annual GDP growth, change in unemployment rate and debt. In the cup part we added the criteria of macroeconomic stability (average balance of the current account and average inflation rate).

Who was successful? Who got knocked out at the group stage? And, how did Poland do?

Germans went home straight away. Poland left with second place

Rumour has it that football is a game in which 22 guys run around like crazy and, in the end, Germany always wins. This rumour has no legs to stand on in the economic model. The defenders of the champion's title have to accept the fact that the German economy has grown at the slowest pace since the World Cup in Brazil comparing to the group's opponents - Mexico, Sweden and South Korea. Germany has lost many points on its high debt to GDP ratio (68% on average in 2014-2018) and it has not managed to catch up with the advantages of the labour market.

So, after the knockout stage, in group F, Sweden (picked up maximum points) and Korea (two wins) go through. They have been able to grow rapidly despite their already high level of development, thus leaving Mexico behind.

In group H, Poland faced tough opponents - Senegal, Colombia and Japan. Senegal has developed very rapidly in recent years and, taking into account the IMF's estimates for the whole of 2018, the total average annual growth rate has increased 6.3% since the last World Cup. With debt close to GDP and stable unemployment in Poland, Senegal leaves the group in first place. Poland ranks second (6 points), outperforming Japan, which is losing due to its huge public debt (235% of GDP).

What are the most interesting outcomes from other groups? An overwhelming defeat for Argentina (due to the average growth of about zero and higher unemployment comparing to 2014) and French weakness. Both Albicelestes and Les Bleus leave Russia without victory.

Poland plays the quarter finals against Korea. Penalties determine the outcome

The cup ends in laughter. We are also increasing the scale of the difficulties and complementing the game with external stability and competitiveness (current account balance - D/A) and inflation. This quickly shows us which team “overheated” in the first round.

Panama is a good example, with an average annual D/A deficit of almost 8% GDP. The team from Central America quickly loses to the Polish Eagles in the knockout stage. Poland moves up to the quarter-finals, where it plays an extremely hard game against South Korea.

Koreans lost to the Poles after the group phase (the drop in unemployment was much greater in Poland), but they gained a lot of points thanks to a serious surplus in the current account. In the end, it’s the Poles who come out on top, but it’s a long fight with extra time and a series of penalties.

Poland in the final round! Against…

Spain was lucky enough to reach the semi-finals, because in the last 16 "La Furia Roja" met Egypt. The winning streak for the Spaniards ends in a clash with Poland, where they had to lose mostly because of the high debt to GDP. This is how the Polish team registers on 15th July in the final at the stadium in Moscow.

The football and finance experts may find the final teams surprising, not only because of the presence of Poland. On the other hand, Iceland reaches the most important match of the championship. However, this is neither a mistake nor a coincidence (as in the case of the UEFA European Championships quarter-finals in France). Despite the huge crisis at the end of the last century (bank crisis, control of capital movements), Reykjavik managed to halve its debt, enter the path of rapid growth and regain international competitiveness.

Who wins the most important match? Hmm. If the numbers do not match up, more fool them... After all, the final is governed by its own rules. Ultimately football, just like the economy, is also the place of incredible surprises.

Would you like to know how we came up with these results? To find out click here


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