The Olympics is putting Japan’s economy at stake, whether or not the country proceeds with the event. The country has spent billions of its funds on the preparation of the event. The event, however, could also turn into a super-spreader event and damage Japan’s economy further.
Despite a majority of votes against the Olympics, Japan has finally decided to proceed with the Olympics. The event will start on July 23 after a year of postponement. The organisers of the Olympics vowed to adopt strict safety measure with the event. To ensure safety, athletes and the Japanese public will not be mixed together.
In January, the Japanese government revealed to have disbursed $3.7 billion for the Olympics. The expected loss if Japan cancels the even, as noted from Reuters, is around 1.8 trillion yen (16 billion). However, this estimated loss could be less than what comes if the event leads to another possibly emergency curbs, a top economist predicts.
The Olympics: the what-ifs
An executive economist of Nomura Research Institute, Takahide Kiuchi, stated that the loss from the first nationwide state of emergency from spring is estimated to reach 6.4 trillion yen. The second and third running state of emergency further weighs the country’s economy.
Quoted from Reuters, Kiuchi noted through a report published on Tuesday, “If the (Olympic Games) trigger the spread of infections and necessitates another emergency declaration, then the economic loss would be much greater”. Kiuchi added that the direct loss of the Olympics cancellation accounts for a third of a percent of nominal gross domestic product (GDP) in fiscal 2020.
Kiuchi concluded the report by saying “These calculations suggest that the decision of whether to hold or cancel the Games should be made from the perspective of infection risk rather than economic loss”.
Kiuchi’s prediction is in line with Japanese tycoon and Softbank Group CEO Masayoshi Son. Through a series of tweets, Son voiced his opinion on the aftereffect of the Olympics on Japan.
By far, there has been 719,000 coronavirus cases in Japan. Though the number is comparably lower to other countries, Japan’s medical system is already strained. Furthermore, vaccination in Japan is going slow with only 5% inoculated.
Read also: Despite COVID-19, 3 Japanese Businessmen Are Still Wealthy (Part 1)
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