The Extinguished Fire: The 2020 Olympic Postponement and its Impact on Japan’s Economy
Hazuk Asghar, Print Staff Writer
August 10, 2020
On July 24, 2020, the city of Tokyo was expected to invite the world to the 2020 Summer Olympic Games. For nearly seven years, preparations were ongoing for Japan to welcome athletes, coaches, and spectators to one of the world’s greatest sporting events. However, amid these ongoing preparations, another event was unfolding that would dramatically alter the schedule of the games: the COVID-19 virus. The continuous spread of this virus and its increasing severity have created a global pandemic, which has consequently postponed the 2020 Olympics to the summer of 2021. While a rescheduling of the Olympics may appear to have no immediate consequences for Japan, this is not entirely accurate. Instead, evidence suggests that the postponement may have serious consequences for the host nation, and most notably, for its economy.
The postponement or cancelation of an Olympic Games rarely occurs and is often avoided due to the immense preparation and costs that are associated with hosting the games. While the 1916, 1940 and 1944 Summer Olympics were cancelled because of the ongoing world wars, the postponement of the 2020 Olympics marks the first time an Olympic Games was postponed during an era of peacetime. Since the event itself has rarely been rescheduled, it is often difficult to assess the effects that an Olympic postponement can bring for the host country. However, current research proposes that the delay of the Tokyo Olympics will have various effects on Japan’s economy by hindering opportunities for economic growth and prosperity. The Olympics were seen as a way to reinvigorate the Japanese economy, which shrank an annual 7.1 percent from the previous quarter of 2019. However, a one-year delay further results in a loss of 641 billion yen, or $5.8 billion USD, and Japan has already spent $26 billion USD to prepare for the games. As a result, since Japan has lost substantial amounts of money due to the Olympic postponement, its economy has been placed in a vulnerable state. Evidence further suggests that other components of Japan’s economy which generate profit, such as the tourist industry, small businesses, and media sponsors, have and will continue to suffer from the Olympic delay due to COVID-19. Economic models project that the Olympic postponement will cause the Japanese gross domestic product (GDP) to fall 2 percent in 2020 since the tourism industry is dormant due to travel restrictions and social distancing requirements. This will also be followed by a collapse in the goods and services sector, including retail and entertainment businesses. The one-year Olympic postponement will impact consumption and business confidence for Japanese businesses, causing many speculations as to whether small and medium-sized firms and their employees can sustain themselves until 2021. Additionally, research indicates that Japan’s economy will suffer from the Olympic cancellation due to a loss of investment from broadcasters and media sponsors. While the economic benefits from investment in infrastructure have already occurred, the Olympic postponement affects media sponsors who have invested billions of dollars into the games in the form of endorsements and advertisements. Overall, a general conclusion from current research indicates that the delay of the 2020 Olympics will send the Japanese economy into a recession, which is generally known as two consecutive periods of negative economic growth for an individual country.
Therefore, it is clear that COVID-19 has and will negatively impact the Japanese economy through the Olympic postponement. This is because the virus has set unprecedented circumstances for the host nation and has limited Japan’s ability to improve and grow its economy. In the past, the Olympics have proved to be a benefit for the host nation’s economy by generating possibilities of employment for residents and profit for local businesses, all of which are essential to enhancing the economy. However, in the face of COVID-19, it is reasonable to infer that these possibilities have been halted and have jeopardized the Japanese economy by potentially sending it into a recession without economic activity and growth. The postponement has several economic repercussions, which include a loss of revenue and profit in the economy and a loss of employment opportunities. It also prevents endorsements from advertisement agencies and companies, while also preventing sponsors from investing their money into the games. Ultimately, all of these factors interact with each other and hinder Japan from experiencing the economic benefits that come from hosting the Olympics. The nation cannot provide citizens with employment opportunities and is unable to interact with businesses and trade goods on the markets, thereby halting any possibility of economic growth. While the Olympics had the potential to prevent another recession while generating economic growth, it appears that Japan’s economy will remain stagnant and must sustain itself without the help of the Olympic Games.
Interestingly, concerns are still centered around the COVID-19 outbreak in Japan and its long-term economic impact. Even if the Olympic Games had occurred during the initial schedule, the COVID-19 pandemic would have negated any positive benefits for the Japanese economy in the long run due to the stress it has put on Japan’s health care system and economy. The cancellation of the Tokyo Olympics clearly emphasizes the severity of the pandemic, which is spreading around the world and has the potential to bring Japanese and global economies into a recession or depression.
It is the view of this writer that the Tokyo Olympics postponement will have a negative impact on Japan’s economy by limiting its potential for economic growth and prosperity. The Olympic Games have always served as a means for the world to come together and celebrate the athletes who have worked their entire lives for this event. In the past, the games have also benefited the host nation’s economy through increased employment, broadcast revenue, and tourism. While Japan could have experienced these benefits in 2020 and in the long-run, the COVID-19 pandemic has delayed any possibility of economic prosperity for Japan in 2020.