Cancelling the Tokyo Olympics and Paralympics this summer would cost Japan around 1.81 trillion yen ($17 billion), a research institute estimate showed Tuesday, as Japan scrambles to curb coronavirus infections with the major sporting event now just two months away.
The Nomura Research Institute warns of even a bigger economic loss if a fresh state of emergency is declared to cope with another spike in coronavirus cases after the Tokyo Olympics and Paralympics have been held as scheduled.
"Even if the games are canceled, the economic loss will be smaller than (the damage done by) a state of emergency,"
Takahide Kiuchi, executive economist at the Nomura Research Institute, said.
If the Tokyo Games from late July are held without spectators, this will result in 1.66 trillion yen in economic benefits, some 146.8 billion yen less than if they are held with domestic spectators, according to the institute.
Media polls have pointed to a worried Japanese public over the pandemic. Nearly 60 percent of respondents in a Kyodo News survey in mid-May said the Tokyo Olympics and Paralympics should be canceled.
Parts of Japan, especially populous areas such as Tokyo and Osaka hit by a resurgence of coronavirus cases, have been placed under a fresh state of emergency. The country's vaccine rollout has been gaining momentum but still lags behind other advanced countries like the United States and Britain where signs of some normalcy have emerged.
The United States on Monday advised its citizens not to visit Japan due to the COVID-19 crisis, raising its travel alert to the highest level of 4, while Japanese government officials played down the impact.
Japan's state of emergency, aimed at easing the strain on hospitals treating patients in the affected areas, does not involve hard lockdown measures similar to those in Britain or other countries.
Based on Kiuchi's calculations, the first emergency declaration in the spring of 2020 resulted in an economic loss of around 6.4 trillion yen and the second between January and March 6.3 trillion yen. The current declaration, which began in late April, will likely lead to a loss of 1.9 trillion yen with the amount likely to increase if the government decides to extend it beyond the May 31 deadline.
"These estimates suggest that a decision on whether to hold the games or not as well as to limit spectators should be made based on the impact on infection risks, not from the standpoint of economic loss," said Kiuchi, a former policy board member at the Bank of Japan.
The Japanese economy faces the risk of another contraction in the April-June quarter after it shrank an annualized real 5.1 percent in the first three months of 2021.
Last week, John Coates, vice president of the International Olympic Committee, said the Tokyo Olympics from July 23 to Aug. 8 would be held even if the Japanese capital remained under a state of emergency.