WSJ "Tokyo Olympics: Japan's Loss Inevitable Regardless of How It's Held"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The Wall Street Journal (WSJ), a major U.S. media outlet, reported on the 31st (local time) that the Japanese government’s determination to proceed with the Tokyo Olympics will inevitably face economic losses regardless of how the event is held.

WSJ diagnosed that given the ban on foreign spectators has already caused a loss of over $1 billion (approximately 1.1 trillion KRW), and considering the possibility of a COVID-19 resurgence due to pushing forward with the games, losses are unavoidable under any scenario.

If the games are completely canceled, economist Takahide Kiuchi of Nomura Research Institute estimated the economic loss could reach $16.5 billion (approximately 18.3 trillion KRW).

WSJ observed that in the worst-case scenario of Olympic cancellation, the loss amount could be just under 0.5% of Japan’s Gross Domestic Product (GDP).

The cost would also be significant if the Olympics open as scheduled but trigger a large-scale COVID-19 outbreak. If a resurgence leads to the reintroduction of a state of emergency and forces businesses to close, the economic damage could snowball.

Japan had expected that spectators would spend over $2 billion (approximately 2.2 trillion KRW) on tickets, hotels, and restaurants when bidding for the Tokyo Olympics, but the inability of foreign spectators?who make up the majority?to attend has caused a major blow.

Experts have differing views on how much economic loss could be recovered if the organizing committee proceeds with allowing domestic spectators.

Toshihiro Nagahama, an economist at Dai-ichi Life, predicted that allowing domestic spectators would stimulate spending on travel, hotels, and dining, generating economic effects worth tens of billions of dollars. However, economist Kiuchi from Nomura Research Institute expected that even if direct Olympic viewing becomes possible, leisure spending within Japan would not increase significantly.

Currently, it is known that allowing domestic spectators up to 50% of total capacity is the most likely plan. In this case, Nomura Research Institute forecasts that $640 million (approximately 709.4 billion KRW) of the $2 billion loss expected under a completely spectator-free event could be recovered.

Nevertheless, the inability to benefit from foreign tourist attraction remains a considerable blow.

Katsuhiro Miyamoto, an economics professor at Kansai University in Japan, pointed out that the expected revenue from future revisits by foreign spectators of the Tokyo Olympics was estimated at up to $10 billion (approximately 11.1 trillion KRW), but this opportunity has been lost.

Although opposition voices from the opposition parties, business circles, and media are rising due to health concerns, the WSJ analyzed that with the Australian softball team’s first arrival on June 1 and the subsequent arrival of teams from various countries, the Japanese government is facing even greater pressure.

This content was produced with the assistance of AI translation services.