France's 2024 Olympics: 'Moderate' impact on the country's economy in 2024

01, Jul - REVIEWS

According to the Franco-German financial group ODDO-BHF, the 2024 Olympic Games in Paris will have a limited impact on the French economy in the short term and a negligible impact in the longer term. On the other hand, the hotel, entertainment, catering and transportation sectors should get a good boost from increased consumer spending during the event.

Will the Olympics contribute to France's economic growth? With only 100 days to go until the beginning of the sporting events, the Organizing Committee is reaching the finish line. France is preparing to host dozens of sports delegations and waves of tourists from around the world. The worsening geopolitical situation in the Middle East will undoubtedly force the authorities to strengthen security systems. Against this background, ODDO-BHF economists have tried to assess the economic impact of this sporting event. "At the macroeconomic level, the impact will be modest," said ODDO-BHF chief economist Bruno Cavalier at a press briefing in Paris on Tuesday, April 23.

As an aside, the economist believes that there is a "one-off effect due to the additional costs. Within a few years, we can achieve growth of 0.1%". In their study, the experts even mention a minor impact in the medium term. Bruno Cavalier explained that since "such activities are awarded on a competitive basis, countries have an incentive to overestimate the expected benefits and minimize the associated costs." Economists agree that the organization of major sporting events does not have a lasting impact on a nation's economy. In its latest forecast, the French Observatory of Economic Conjectures (OFCE) expects growth to reach +0.3% in the third quarter, but this will be immediately followed by a slowdown to +0.1%.

No budgetary setbacks are expected

As far as the budget is concerned, the Olympics have been accompanied by big budget spending on occasion. "We all remember the Olympics that turned out to be very expensive - in Rio, Beijing or Sochi," continues Bruno Cavalier. Today we are talking about spending 40 or 50 billion euros in the case of these three cities. As for France, the ODDO-BHF economists are not worried - France doesn't seem to be overly cost-conscious. "We cannot say that there is any mismanagement," Bruno Cavalier emphasized. He also emphasized that the upcoming Olympic Games are largely based on already existing infrastructure, thus keeping costs down.

The total budget is estimated at 10 billion euros, of which 4.4 billion euros will be provided by the OCOG (Organizing Committee). This amount is "colossal, but on a macroeconomic scale it is relatively small," adds the economist. Since France's annual GDP is around €2,900 billion, it is hard to call the organizational costs too burdensome.

In addition, the Asterès think tank emphasizes that these costs are not concentrated only on 2024, and the economic effects extend both before and after the event. The typology of the economic effects of the Olympic Games, according to the company, remains difficult to quantify. Regarding tourism, the overall impact is positive, but some tourists may avoid the host city for fear of higher prices and congested transportation. The impact on image and attractiveness remains a subjective concept closely linked to the organizational success of the event.

Microeconomic impact

The impact of the Olympic Games on the French economy is expected to be mainly sectoral. According to Jérôme Baudin, research coordinator and financial analyst, the event "will have a larger and more visible microeconomic impact". As far as the sector is concerned, "the impact will be mainly advertising". Some companies such as TF1 and JCDecaux, which produce landscape architectural elements, should do well. In the catering sector, the challenge is huge: 13 million meals are to be served. The real estate and accommodation market is also in a similar situation.

In the hotel industry, more than 150,000 jobs will be needed to organize and develop tourism. As for transportation, airlines such as Air France-KLM EasyJet and Lufthansa should benefit from the Olympics, given their geographical location, but "the effect of traffic volume will be limited in the short term." Finally, on the consumer goods side, the sporting event should have a positive impact on food groups and companies, especially those producing alcoholic beverages.

Related to the 2024 Olympics figures

• 15 million visitors are expected, including 1.2 million foreigners;
• Total budget of 10 billion euros;
• 15 billion euros of added value (upper limit).

The Olympics will not radically change the public finance situation. Involved in a budget situation that is spiraling out of control, the government is currently looking for savings in the absence of growth. Economists are not ruling out some additional spending, particularly related to security. "All the real costs will only be known after the contest," they note.