Massive losses anticipated if Summer Games are called off
Tokyo, Wednesday
Japan and Olympic organisers are at pains to insist this summer’s Games in Tokyo are on, despite the new coronavirus outbreak, but what would a cancellation cost the world’s third-biggest economic powerhouse?
With a dearth of reliable figures, opinions vary, yet experts all agree on one point: Games or no, the main risk to the Japanese economy this year is a prolonged global coronavirus epidemic.
What has the Games cost Japan? At the end of 2019, organisers estimated the total cost of the Games at around $12.6 billion (Sh 1.3 trillion).
That is divided between the city of Tokyo, which is paying 597 billion yen, the Japanese organising committee, which contributes 603 billion yen and the central government, which is paying 150 billion yen.
But the actual costs for the country have been hotly debated, with a widely publicised audit report estimating national government spending from the bid in 2013 until 2018 at 1.06 trillion yen, nearly 10 times the budget.
Japanese businesses have also poured money into the event in sponsorships, paying out a record Sh 339 billion ($3.3 billion).
And that figure doesn’t include the partnerships signed between major companies and the International Olympic Committee for rights to sponsor several Games.
Among those are giants including Japan’s Toyota, Bridgestone and Panasonic.
Which sectors would be affected?
According to analysts at Capital Economics, one key factor to consider in terms of how a cancellation might hit Japan’s economy is that most of the spending has already happened.
That means the effects of outlays, most notably on construction of new sporting venues, has already been factored into GDP in recent years.
But a cancellation would be a drag on tourism, as well as general consumption in the country, already under pressure after a controversial sales tax hike last year.
Tourism in Japan was already hit before the virus, amid a diplomatic spat with South Korea that prompted boycott calls.
Visitors from South Korea previously made up the second largest contingent of tourists to Japan, behind only China. -AFP
