The postponement of the summer Olympic Games in Tokyo could cost the Japanese economy up to $6.3bn (£5.3bn), according to the Nikkei Asian Review.
On Tuesday, Japanese Prime Minister Shinzo Abe and International Olympic Committee president Thomas Bach agreed to postpone this summer’s Games until 2021 due to the escalating coronavirus pandemic.
They agreed that the Olympic flame will stay in Japan until then.
Before the IOC announcement, Canada and Australia had already said they would not send their athletes to the Tokyo Games because of coronavirus dangers, while the US and Germany had requested for them to be delayed for a year.
That $6.3bn figure, based on independent economists’ estimates is higher than the $4.9bn loss in ‘domestic and inbound consumption” predicted by investment bank Goldman Sachs.
Goldman’s chief Japan strategist Kathy Matsui told CNBC this week that the escalating COVID-19 pandemic was likely to have a bigger impact on Japanese exports and domestic consumption, compared to the hit of delaying the Olympics.
“We need to keep in mind a sense of perspective here as, according to our economics team, the Olympics alone was only forecast to boost GDP by 0.2 percentage points,“ Matsui said. “So in the grand scheme of things, the Japanese overall [impact on] GDP per size of economy is not that large.”
Companies like Toyota and Bridgestone, which have longstanding sponsorship contracts with the Olympic Committee stand to take a financial hit from the delay. Hotels must also brace themselves for massive losses.
The Japanese government had already invested $9bn in infrastructure and construction projects by the end of last year in preparation for the Games.