The International Olympic Committee (IOC) took the unprecedented decision of postponing the Tokyo 2020 Summer Olympic Games due to the outbreak of coronavirus and in the face of ever-growing pressure from athletes and national Olympic committees. Athletes and fans are disappointed but this was a necessary step to further prevent the spread of COVID-19 disease. With the exception of the two world wars, the Olympic games had never been cancelled or postponed since they began in their modern guise in 1896.
It was expected that the Tokyo 2020 Olympic and Paralympic Games would have a positive economic impact on Japan. The revenue would have been approximately 20 trillion Japanese yen in the Tokyo Prefecture alone and about 32 trillion yen nationwide. These unforeseen circumstances due to the crisis following the world-engulfing COVID-19 pandemic came as a nasty blow to Japan. The Japanese government had expected everlasting social, economic and cultural benefits from measures taken towards the success of the Tokyo 2020 games.
Fitch Solutions said in a report that the postponement or cancellation of the Tokyo Olympics Games could deal “a huge blow to Japan’s economy and prestige. Although the Japanese government would not necessarily be viewed negatively for postponing or cancelling the games, it would rob Prime Minister Shinzo Abe of a potential major national celebration in 2020 as he prepares to step down in September 2021,” the analysts said in a note dated March 17th, 2020. Conversely, if the Olympic games had not been postponed, it could have upset a significant part of the population who feared a second wave of infection, as Japan would have had to welcome athletes, staff and tourists from all around the world.
The government also projected about a 12 trillion yen long-term demand through projects which would be carried out before and after the opening of the 2020 Olympic and Paralympic Games. These include the use of permanent facilities and the Olympic village, urban development of the city, expansion of the sports and culture industry, as well as the stimulation of the tourism industry. The direct increase in demand was estimated at around two trillion yen, generated by investment and expenditure directly connected to the Olympic and Paralympic games. This investment included constructing permanent venues, developing energy infrastructure, establishing security precautions and managing public relations. Furthermore, an increase in new employment of about 1.94 million people in the country was also anticipated. According to the Financial Times, the economic growth in developed countries that have hosted the Olympics since 1992 show the strongest growth in the years ahead of the Games as money is spent on infrastructure and investment. The actual year of the Games by itself delivers only a limited boost mostly due to the influx of tourists from around the world.
Therefore, postponement of the games is unlikely to cause serious economic harm. However, the economic recovery for the rest of the year definitely depends on the course of the coronavirus containment measures. It is predicted that Japan would expect a 5% dip in GDP if Tokyo moves to a full lockdown as claimed by Waqas Adenwala, Asia analyst at EIU. Japanese authorities, like their global counterparts, have introduced measures to soften the economic hit from the outbreak. These measures will be welcomed during a time of great uncertainty that the nation is facing.
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