Exploring the Potential Economic Impact of Hosting the FIFA World Cup in Saudi Arabia in 2034

As Saudi Arabia prepares to host the FIFA World Cup in 2034, a wave of excitement surrounds not just the sports event but also its potential economic impact. A recent report by SNB Capital suggests that this global event could significantly elevate the Kingdom's stock market performance and non-oil gross domestic product (GDP).

The forecast is promising, with projections indicating a rise in non-oil GDP of 4 to 5 percent in the medium term, about four to eight years after the event. This growth is closely tied to the Kingdom's Vision 2030 initiative, which focuses on moving away from oil dependency and diversifying its economy.

Historical Performance: A Comparative Analysis

SNB Capital's analysis references prior host nations, such as South Africa in 2010, Russia in 2018, and Qatar in 2022. Each of these nations experienced notable positive effects on their equity markets after being selected to host.

Typically, decisions to host these events are made well in advance, often seven to twelve years prior. After the announcement, markets generally perform better. For example, South Africa saw returns of approximately 45 percent in the equity market in the years following the announcement of hosting the World Cup, outpacing its peers. Qatar and Russia also exhibited strong market performances. This history suggests that Saudi Arabia's stock market could outperform other emerging markets as 2034 approaches.

Short-Term Benefits: Infrastructure Development

In the lead-up to the tournament, Saudi Arabia is expected to experience a surge in infrastructure spending. This includes building new stadiums, improving transportation networks, and enhancing urban facilities to not only host the tournament but also accommodate the expected influx of tourists.

The construction and infrastructure sectors stand to gain the most. Companies specializing in steel, cables, and cement are predicted to thrive. For instance, the construction phase could generate thousands of jobs, with reports estimating that over 100,000 jobs might be created directly and indirectly due to the influx of projects.

High angle view of a modern stadium under construction — Modern stadium construction in progress

Medium-Term Gains: Completion and Utilization

Once projects reach completion four to eight years after the announcement, the economic benefits will continue. The construction firms involved will not only see immediate profits but also long-term growth as the infrastructure serves dual purposes for both the World Cup and future events.

As the infrastructure becomes operational, sectors like tourism and hospitality will likely thrive. Saudi Arabia's cultural heritage and attractions will draw visitors, increasing revenue for hotels, restaurants, and retail. It is estimated that the hospitality sector could see a 20 percent increase in revenues, tapping into an available market of millions of tourists.

Long-Term Implications: Tourism and Retail Sectors

Looking beyond the World Cup, the event could establish Saudi Arabia as a prominent player in global tourism. The hospitality sector is expected to significantly benefit, attracting foreign investors and enriching the local economy.

With improved infrastructure, the retail industry could also boom. Spending habits may shift, with discretionary spending rising as consumer confidence grows. Reports indicate that sectors like food and beverage could see an increase of 15 to 25 percent in sales, driven by both local consumption and tourist spending.

Economic Diversification: A Lasting Objective

The FIFA World Cup marks an important milestone in Saudi Arabia's quest for economic diversification. Guided by Vision 2030, the Kingdom aims to reduce its oil reliance and build a more vibrant economy.

The World Cup offers an excellent platform to showcase Saudi Arabia's potential, boosting sectors like tourism, real estate, and various services. Investment in these areas not only enhances economic stability but also cultivates innovation and a more interconnected economy.

Looking Ahead to 2034

The excitement surrounding Saudi Arabia's hosting of the FIFA World Cup in 2034 could trigger substantial economic growth and transformation. The forecasted impact on stock market performance and non-oil GDP underscores the potential of major international events to drive broader economic goals.

Reflecting on the experiences of past host nations, it is evident that strategic investment in infrastructure lays the groundwork for long-term benefits. As Saudi Arabia advances its preparations for this historic event, the focus will remain on harnessing this opportunity to achieve lasting economic advantages and align with national objectives.