Cancelling the Tokyo Olympics will cost Japan around $17billion, while the damage caused by another Covid-19 state of emergency will be higher, experts have warned.
An estimate by the Nomura Research Institute (NRI) has claimed that cancelling this summer’s Tokyo Olympics would cost the country around $17billion (¥1.81 trillion).
But an economist at the think-tank has warned that the economic loss from coronavirus cases spiking could be even more damaging, Japan Times reported.
Japan, which has recorded more than 700,000 infections and 12,000 deaths from the virus, is in the grip of a month-long state of emergency and has delivered vaccinations to just under 5 per cent of its population.
Some 80 per cent of Japanese people have called for the postponed 2020 Olympic Games, which is due to be held from from July 23 to August 8, to be cancelled or postponed.
And Takahide Kiuchi, executive economist at NRI, said cancelling the Olympic Games will be a smaller economic loss than the damage caused if another Covid state of emergency is declared following the event.
Kiuchi explained: ‘Even if the games are canceled, the economic loss will be smaller than (the damage done by) a state of emergency.’
There will be a $15billion (¥1.66 trillion) loss if the Tokyo Games is held without spectators, according to calculations by the institute.
But Kiuchi estimated that the first state of emergency in spring 2020 cost the country around $59billion (¥6.4 trillion), while the second between January and March saw losses of $58billion (¥6.3 trillion).
Meanwhile, the current emergency declaration, which came into force in late April, will lead to a loss of $17billion (¥1.9 trillion), while the amount will likely increase if the emergency is extended past Monday, according to estimations.
he Japanese government and the International Olympic Committee (IOC) have faced calls for a further postponement or cancellation because of rising coronavirus cases in Japan and elsewhere.
On Wednesday, Japan recorded 4,644 new Covid cases, bringing the total of overall infections recorded up to 726,586.
Meanwhile, the latest death figures saw 93 new fatalities, seeing the overall toll rise to 12,457, as Japan continues to tackle its third state of emergency.
A growing number of investors in Japanese stocks believe canceling the games is better for the market, intensifying the pressure on Prime Minister Yoshihide Suga, who is already facing intense public opposition to the global showcase event.
Financial leaders fear that the potential damage to Mr Suga, as well as the resulting political uncertainty, could cause a major hit to the economy, as could a fresh surge in infections following the arrival of thousands of competitors and staff.
‘An increasing number of people think not holding it is better for Japanese stocks, than doing it and ending up with political instability,’ Arihiro Nagata, general manager of global investment at Sumitomo Mitsui Bank, previously told the Japan Times.
Takahide Kiuchi, executive economist at Nomura Research Institute and a former Bank of Japan board member, said Japan stands to lose $16 billion (£11.3m) if the Olympics were cancelled, but that would pale in comparison to the economic hit from emergency curbs stemming from a fifth wave, a top economist estimated.
‘If the (Olympic Games) trigger the spread of infections and necessitates another emergency declaration, then the economic loss would be much greater,’ he Kiuchi said in a report published today. The direct loss from a cancellation would be equivalent to a third of a percent of nominal gross domestic product (GDP) in fiscal 2020, he noted.
‘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,’ he concluded.
Kiuchi’s estimate supports the view expressed by Japanese tycoon and SoftBank Group CEO Masayoshi Son, who argued in a series of tweets at the weekend that Japan could have a ‘lot to lose’ if the Olympics led to a spike in infections.
The billionaire wrote: ‘Currently more than 80 per cent of people want the Olympics to be postponed or cancelled. Who and on what authority is it being forced through?’
Legally, only the IOC has the right to cancel the Games because Japan is contractually obliged to go ahead with the event.
It comes after a scientist on Independent Sage called for the cancellation of the Tokyo Olympics while the world fights the ‘extremely dangerous’ coronavirus.
Earlier this week, Professor Gabriel Scally, visiting professor of public health at the University of Bristol, said the Olympics were ‘not feasible’ during the pandemic.
He also warned that exempting athletes from quarantine would create a ‘big melting pot’ which could be a ‘recipe for a potential outbreak of some magnitude’.
The UK Government and the British Olympics Association, which oversees Team GB, are fully behind the Games – despite the US State Department on Monday issuing its highest Level 4 travel warning for the Asian nation.
Speaking to MailOnline on Tuesday, Professor Scally said: ‘We haven’t had an Olympics in years when there are world wars on, and the world is currently fighting a battle against an extremely dangerous disease.
‘You can’t have an armistice to call a halt to this pandemic. Exempting athletes from quarantine strikes me as completely amazing. The creation of a big melting pot of people from across the world who haven’t gone through isolation seems to be a recipe for a potential outbreak of some magnitude.
‘They are all going to be fit and healthy people but nonetheless it is still a problem. As well as living in close proximity many will also be engaging in contact sports. They need to postpone the Olympics or not have it.’
However, a BOA spokesman said in a statement: ‘We remain fully committed to sending our full team to the Tokyo Olympic Games, and everything we hear from our colleagues in Tokyo, the Japanese Government and the IOC tells us that the Games are going ahead.’
The spokesman pointed out that US athletes would still be competing, adding: ‘We also note our colleagues at the United States Olympic Committee spoke of their ongoing confidence for their participation at the Games this summer.’
The UK Foreign Office yesterday repeated its position that Japan is off limits to Britons, but athletes and staff can go after Culture Secretary Oliver Dowden lobbied Boris Johnson to allow all Team GB members to receive a dose of the Pfizer vaccine.
Team GB Chef de Mission Mark England yesterday said he was ‘100 per cent confident’ the Games would happen thanks to the vaccine deal, which a government spokesman today said should provide ‘reassurance’ to athletes.
Japan announced in March that all international spectators would be banned. The country’s borders are already closed to foreign nationals apart from those with residency.
Dozens of Japanese local leaders have responded to a wave of anti-Olympics street protests by refusing to host athletes in their cities.
At least 40 out of 500 towns registered to accommodate international competitors have now declined to do so in order to avoid putting extra pressure on hospitals, according to local reports.
Hospitals in Japan’s second largest city of Osaka are buckling under a huge wave of coronavirus infections, running out of beds and ventilators as exhausted doctors warn of a ‘system collapse’ and want the Games cancelled.
‘The Olympics should be stopped, because we already have failed to stop the flow of new variants from England, and next might be an inflow of Indian variants,’ said Akira Takasu, the head of emergency medicine at OMPUH.
He was referring to a variant first found in India that the World Health Organization (WHO) designated as being of concern after initial studies showed it spread more easily.
‘In the Olympics, 70,000 or 80,000 athletes and the people will come to this country from around the world. This may be a trigger for another disaster in the summer.’
Japan’s western region – home to 9 million people – is suffering the brunt of the fourth wave of the pandemic, accounting for a third of the nation’s death toll in May, although it constitutes just 7 per cent of its population.