The Olympics only comes around once every four years, and sees the world wait in anticipation to send off their top athletes to the host nation’s Games. Of course, it’s a huge honour for any country to host the Olympic Games, but it’s not without its costs. To qualify to be in the running to hold the Games, countries must submit a bid to the International Olympic Committee. In order to host the 2020 Olympics, Tokyo’s successful bid amounted to an estimated $75 million. Organising these prestigious Games is a costly affair, since nations typically have to construct arenas, sporting grounds and provide additional infrastructure for tourists visiting to watch the events. But what affect can this have on the host nation’s economy?
As aforementioned, a typical Olympic Games is extremely costly, but Tokyo’s Games have been anything but typical. In this article, we will look at the overall effect that a postponed Olympics with no spectators has had on Japan’s economy.
The typical economic benefits of hosting the Olympics
It is a privilege for a country to host an Olympic Games and you might only get the chance to witness a home Games once in your lifetime. The Olympics can be hugely beneficial for host nations, since they attract a huge number of tourists, visiting to watch the world’s biggest sporting talents battle it out for those elusive medals. Additionally, the Games can create a wealth of jobs, since infrastructure will need to be constructed to accommodate the various sports involved, and to cater for both the athletes and the fans.
However, it’s clear that Tokyo will not experience many of the typical benefits of an Olympic host nation, since the world is still submerged in a global pandemic, with Japan still experiencing extremely high transmission rates. According to Japanese officials, the budget for the Tokyo Olympics was $15.4 billion, but since the games were postponed and the country was hit by many unprecedented factors, it is now believed that spending has reached $20 billion.
Tokyo and COVID-19
The decision that Tokyo’s Olympic games would go ahead without spectators was based upon the fact that the country remains in a state of emergency, with transmission rates of COVID-19 being extremely high. The country is experiencing another surge in cases and the majority of the country is facing tough restrictions, hence why neither national nor international spectators can attend the sporting events.
Since the Games began, there have been nearly 300 people connected to the Olympics testing positive for COVID-19, with 28 of those being athletes. As much as we all are revelling in our country’s success from the comfort of our own homes, it’s clear that the effects of the pandemic are still extremely apparent and hard to ignore.
The effect on the Japanese economy
The Japanese economy was already struggling with the effects of the pandemic, since many restrictions are in place which prohibit travel and have forced many businesses in the hospitality sector to close or reduce their working hours. Since great preparations had been made for the anticipated spectators that have not been able to attend the games, the country is likely to make a significant net loss from hosting the 2020 Olympics. However, the deputy director of the International Monetary Fund’s (IMF) Asia and Pacific department, Odd Per Brekk, released a statement, saying that:
“A change to the plans for the Olympics would have a limited impact on overall near-term growth prospects, given that Japan is a large and diversified economy”
It would appear that the Japanese Yen (JPY) has not suffered from the effects of the empty stands at the Olympics, and if you participate in forex trading online, or are considering investing, it’s worth noting that the JPY has strengthened against the US Dollar (USD) in the first week of August. Overall, it would seem that the long-term impact of an Olympics, which has been greatly impacted by the effects of the pandemic, will not be hard felt by the nation.