The Tokyo Summer Olympics would boost the Japanese economy as much as ￥30 trillion (US$249 billion) by 2020, a report by the Bank of Japan (BOJ) released yesterday showed.
Construction investment triggered by the Games and increasing numbers of foreign tourists would help expand GDP by 0.2 to 0.3 percentage points on an annual average basis from last year to 2020, the bank said.
Olympic planning has been beset by cost overruns and other problems, with the main stadium design swapped for a cheaper one and the price-tag soaring to six times that of the original estimate, according to public broadcaster NHK.
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Even so, the BOJ projects the Games would have a positive economic benefit, with the boost to demand also helping to reduce the impact of a sales-tax increase planned for 2017.
“This is a reasonable estimate,” SMBC Nikko Securities Inc economist Koya Miyamae said.
“There is no doubt that the Olympic Games is good news for the BOJ” as it would demand, he said.
The Japanese economy would be lifted by as much as 0.6 percentage points in 2017-2018 from last year’s levels due to the preparations and “this is expected to reduce the negative impact of the planned sales tax hike,” the bank wrote.
The BOJ declined to give detailed breakdowns of the projections.
Preparations are already starting. Tokyo plans to spend ￥45.2 billion on fuel-cell vehicle subsidies and hydrogen refueling stations for the Olympics as part of Japanese Prime Minister Shinzo Abe’s plan to reduce the nation’s reliance on nuclear power, a city official said in January.
The last Tokyo Olympics gave a boost to the economy, with a bullet train line and highways built in the run-up to the 1964 Games, as well as large-scale development of the city.
Still, the effects of the Tokyo Olympics might be different from that time, the BOJ said.
“There are big uncertainties about the quantitative boost and it’s possible that this may be smaller than other host nations have felt in the past,” the bank said, as Japan already has much of the needed infrastructure.
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