Brand Germany the real winner

GOOD TIMES AHEAD? Lahm celebrating with the World Cup trophy after Germany beat Argentina in the World Cup final on Sunday. The prize for Germany may be even bigger as the victory draws shoppers to the "Made in Germany" brand.


    Jul 15, 2014

    Brand Germany the real winner

    AS GERMAN captain Philipp Lahm raised the World Cup trophy in Rio de Janeiro's Maracana stadium for a historic fourth championship title, he and each of his teammates were 300,000 euros (S$507,000) richer.

    The reward from Germany's DFB football association for bringing the prize to Berlin is a small price to pay compared with the fillip the German economy may get, as the victory draws shoppers to the "Made in Germany" brand, said research institute Prognos.

    "Made in Germany definitely appreciates in value with success," Christian Boellhoff, the managing director of Prognos in Berlin, said in an interview. "It has a strengthening influence on German exports."

    Germany, Europe's biggest economy, is the world's third-largest exporter, behind China and the United States.

    Consignments ranging from from Mercedes-Benz cars to Adidas sporting apparel and Siemens power-plant technology drove the sale of German goods and services abroad to 1.09 trillion euros last year, about 2 billion euros shy of the record in 2012, according to data supplied by the Federal Statistics Office.

    Adidas, as the official sponsor of Germany and contender Argentina, had a headstart going into the duel as "the most visible brand" in the final, chief executive Herbert Hainer said in a statement last week.

    The bout ended 1-0 in Germany's favour, crowning Joachim Loew's eight-year reign as the national coach. Substitute Mario Goetze scored in the 113th minute, allowing the Germans to avoid a penalty shootout.

    "Psychologically, it has a positive effect on self-confidence," said Mr Boellhoff.

    "While you can't calculate this in detail, it can have a positive influence on work motivation and confidence in producing quality."

    World Cup victories have coincided with periods of economic prosperity in Germany in the past.

    The 1954 defeat of Hungary in Bern marked the start of Germany's postwar political and economic recovery, boosting the morale of a defeated nation.

    The 1974 winner's medal came at the dawn of another economic resurgence, and was the year before Germany became one of the founding nations of the Group of Six industrialised countries, which was subsequently extended to include Canada and Russia.

    The 1990 final in Rome, also against Argentina, came eight months after the Berlin Wall came down.

    "It's true that in the three years after 1990, the German economy grew very strongly, but the reason was reunification," said Mr Boellhoff, referring to the merger of East and West Germany on Oct 3, 1990.

    "We have to differentiate between causality and correlation."

    The victory marks the first for a united Germany. No country has made it to more World Cup finals - eight - although Brazil holds the record for titles, with five to Germany's four.

    Regardless of the sporting success, the German economy is heading towards a period of renewed economic prosperity with the beckoning of the "golden 2020s", Mr Boellhoff said, citing a report on Germany published by Prognos last week.

    "Germany is the only country among the largest economies in Europe that is in a really strong situation right now," he said.

    "This can improve even more when its neighbours gradually emerge from the crisis, and this will happen in the next few years."

    German economic growth accelerated more than forecast in the first quarter, propelled by domestic demand and a construction boom.

    The Bundesbank last month raised its growth forecast for the economy, predicting gross domestic product (GDP) will increase by 1.9 per cent this year, higher than the 1.7 per cent it had predicted in May. It expects GDP to climb by 2 per cent next year.

    "Over the years, we have generated our growth largely through industry and exports," Mr Boellhoff said.

    "This is now feeding into people's incomes and that means private consumption is contributing more to growth than has been the case up to now. This will come to the fore in 2017 to 2018, and will continue until the end of the 2020s."