Japan rides on Games again

Japan rides on Games again

TOKYO - The 2020 Olympics could cement the revival of Japan's long-stagnant economy, analysts say, in an echo of how the 1964 Tokyo Games showcased a nation risen from the ashes of defeat.

Staging the world's biggest sporting jamboree "is clearly a plus to (economic) growth", Prime Minister Shinzo Abe told journalists in Buenos Aires, hours after the Japanese capital was named as host.

"Japan has had 15 years of economic stagnation... and we've lost confidence in ourselves. But I hope this will be a chance for us to regain that confidence," Mr Abe said.

In the 1960s, the Games were the coming-out party for a country that had grown to respectability after the ignominy of occupation following World War II. The 1964 Olympics heralded the start of what was to become a vigorous economy, and one that shook up the global order until it came to a shuddering halt at the end of the 1980s.

Two decades of anaemic growth and investment-sapping deflation saw China push a floundering Japan to third place.

But Mr Abe's election in December kindled hopes of a recovery, and his economic plan - dubbed "Abenomics" - has encouraged the green shoots of a recovery that optimists say could really take hold.

Now they hope that a second bite of the Olympic cherry could cement that recovery and recharge a country once known for its economic vigour.

The Tokyo Metropolitan government estimates that hosting the Olympics will see 3 trillion yen (S$38 billion), or less than 1 per cent of Japan's gross domestic product, being spent in the seven years to 2020. But the real impact will be much bigger.

"The Tokyo government's estimate doesn't include redevelopment of roads and other social infrastructure in the Greater Tokyo area, or the government's plan to repair and rebuild infrastructure nationwide," said senior strategist Hideyuki Ishiguro of Okasan Securities.

The stock market in Tokyo was quick to react, opening almost 3 per cent higher yesterday as investors speculated that there would be a boom for construction, real-estate and sportswear firms.

Japan's plan to double the number of foreign tourists by about 2020 "will be easier to achieve with the Olympics", said Daiwa Securities strategist Eiji Kinouchi.

The tsunami of 2011 and resulting nuclear disaster at Fukushima precipitated a sharp drop in the number of foreign visitors, although this has already begun to recover, thanks in part to a much weaker yen.

But the catastrophe, including regular revelations of new problems at the site, could act as a brake. Mr Abe sought to allay fears in his final pitch to the International Olympic Committee in Buenos Aires, stressing that the plant, 220km from Tokyo, was under control.

Said Dai-ichi Life Research Institute senior economist Yoshikiyo Shimamine: "If the hosting of the Olympics proves successful in every aspect, then it will impress the world with the image that Japan is back from two lost decades."

This website is best viewed using the latest versions of web browsers.