Olympics could seal Japan's revival: analysts

Japan's benchmark Nikkei average opened up more than 2 per cent higher on Monday, buoyed by anticipations that Tokyo's victory to host the 2020 Summer Olympics will give a boost to the nation's economy.

TOKYO--The 2020 Olympics could seal the revival of Japan's long-stagnant economy, analysts say, an echo of the 1964 Tokyo Games that 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," Abe said.

In the 1960s the Games were the coming-out party for a country that had grown its way to respectability after the ignominy of occupation after World War II.

The 1964 Olympics heralded the arrival of what was to become the world's second largest economy before it all came to a shuddering halt at the end of the 1980s.

Two decades of anemic growth and investment-sapping deflation saw China push a floundering Japan into third place, as repeated attempts to kick-start the economy did little but add to a mountain of debt.

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

Now they hope that a second bite of the Olympic cherry could cement that recovery and recharge the country.

"The most important thing about the 2020 Tokyo Olympics is that it has reduced risks of Abenomics failing in the middle," said Hideyuki Ishiguro, senior strategist at Okasan Securities.

The Tokyo Metropolitan government estimates hosting the Olympics will see about three 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 Ishiguro says 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, nor the government's plan of repairing and rebuilding infrastructure nationwide," he said.

Ishiguro said the actual economic impact of Tokyo 2020 would not be as large as that from the 1964 Games, when the country had to kit itself out with all manner of big ticket items - including the impressive bullet train network.

In the early 1960s, "the cost of building facilities for the Games was just about 30 billion yen, but including construction of infrastructure such as expressways, water and sewage, it amounted to 960 billion yen," Ishiguro said.

"Likewise the synergy effect this time will be much bigger than Tokyo's estimate."

Daiwa Securities strategist Eiji Kinouchi forecasts the knock-on effect of the Olympics will be 150 trillion yen, comprising some 55 trillion yen in investment and a bump in tourism worth a whopping 95 trillion yen between now and then.

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