Tokyo Olympics: Fears Mount Over Potential COVID Economic Hit | Business and Economy News

After last year’s cancellation due to COVID-19, the Olympic Games are expected to start in Tokyo in five weeks. But as time is running out for the opening ceremony, many Japanese continue to question the decision to host the Games and risk triggering another wave of infections that could derail the country’s fragile economic recovery.

Although foreign spectators have been banned from attending the Games, the event will still attract athletes and officials from around the world, increasing the risk of new variants of COVID-19 being introduced to Japan.

Some public health experts fear the Games will turn into a “superspreader” event. Last month, the head of the Union of Physicians of Japan warned that the rally could even spawn a new “Tokyo Olympic” strain of COVID-19.

Japan is on the downward slope of its fourth wave of COVID-19 infections, and its third declared state of emergency is expected to ease next week.

Although Japan has stepped up its vaccination campaign, it is far behind other developed countries when it comes to vaccine delivery. [File: Pawel Kopczynski/Reuters]

Although the government has stepped up its vaccination campaign, it lags far behind other developed countries when it comes to administering vaccines.

As of Wednesday, just over 6% of the Japanese population was fully vaccinated and less than 10% was partially vaccinated, according to Our World in Data.

A growing chorus of voices including nurses unions, medical associations, prominent business leaders, including the heads of Rakuten and SoftBank – and even one of the government’s top medical advisers – have demanded that the Games Olympics be postponed or canceled altogether to protect the country’s already strained healthcare system and keep its economic rebound on track.

Like other countries around the world, Japan saw its economy hit hard last year by lockdowns and restrictions from COVID-19. But his return to pre-pandemic health has lagged behind his peers. Viral emergencies saw their rebound weaken in the first three months of this year, when the economy shrank 3.9% from the previous quarter, according to the government’s latest reading.

While many economists see the country showing modest growth in the second quarter, some fear the recovery will be hit hard if the Olympics trigger more damage from COVID-19.

“The Olympic Games could be the catalyst for a new wave of expansion in this spread of the coronavirus. This negative impact on the economy could be very huge, ”Takahide Kiuchi, an economist at the Nomura Research Institute, told Al Jazeera.

The former Bank of Japan economist estimates that three pandemic-related closures have so far cost the country 6.4 trillion, 6.3 trillion and 3.2 trillion yen respectively (58.1 billion, 57, 2 billion and 29 billion dollars).

If the Games spark a new wave of infections leading to a state of emergency, Kiuchi said it could cause the economy to contract again in the last three months of this year.

Compared to the revenue the Games could generate – $ 15.1 billion to $ 16.4 billion, depending on whether domestic fans fill venues to capacity – the potential financial cost of continuing the Games overshadows the potential benefits, Kiuchi added.

Ramen shop owner Etsuko Yamazaki has struggled to keep her business afloat during successive waves of COVID-19 in Japan and would like to see the Olympics canceled rather than risk another spike in infection and restrictions undermining them. business [Courtesy of Yumi Morikawa]

Divided companies

One person who would like to see the Games canceled is Etsuko Yamazaki. The owner of a ramen shop in Tokyo’s Suginami district, she told Al Jazeera that she has resorted to selling her belongings to keep her business afloat during successive closures.

The 35-year-old became a social media celebrity in May after a passer-by tweeted a photo of a handwritten sign she posted outside her store that read: “I never received no help from Tokyo, and I’m embarrassed to say I have no more private stuff to sell. I’ve reached our limit… customers, please help me ”.

The tweet has gone viral and customers are now gulping down noodles in solidarity. But she fears relief will only prove temporary if the Olympics trigger a new wave of COVID-19 and usher in more business-sapping restrictions.

“I can’t say that everything will be fine. If the Olympics made the situation worse, it would be more difficult for us to continue the business, ”Yamazaki told Al Jazeera. “All the restaurants and bars are in trouble right now.”

But not all small and medium business owners are so keen to unplug the plug. Motokuni Takaoka is president of Tokyo-based bedding supplier and Olympic sponsor Airweave. He estimates his business lost between $ 5 million and $ 10 million when the Games were postponed last year and wants them to go this year as planned.

“If the Olympics are going to take place, we have to support them,” he told Al Jazeera.

The role of the IOC

Some experts point out that it is not Japan but the International Olympic Committee (IOC) which has the legal authority to cancel the Games.

While Japan could break its contract with the IOC, “the costs would be enormous,” said Paul O’Shea, senior lecturer at Swedish University of Lund, writing in the conversation.

As O’Shea points out, although host cities typically lose money on the Olympics, the IOC derives its income from their organization.

Laura Misener, director of the School of Kinesiology at Western University in Canada, said with billions of dollars in sponsorship at stake, the IOC is working to ensure its brand is not tarnished.

A general view of the Olympic Stadium (National Stadium) in Tokyo [File: Pawel Kopczynski/Reuters]

“I think the irony of course is the fact that if it doesn’t go well, and they get everyone out there, the brand they’re going to walk away with will be a lot worse than it could be. ” be in cancellation conditions [the] Games at this point, ”she told Al Jazeera.

But others believe there could be an uncompromising political calculation at play amid media reports that Prime Minister Yoshihide Suga is likely to call an early election after the Olympics.

The IOC declined Al Jazeera’s request for an interview. The Tokyo 2020 press office, citing time restrictions, was unable to respond to Al Jazeera’s interview request for this article.

Robert Baade, professor of economics at Lake Forest College in the United States who has written on the economic impact of the Olympics, gives little credit to the theory that contractual obligations and the threat of massive financial sanctions dictate compliance apparent from Japan to the IOC on whether to cancel.

“I think the Japanese government would like the IOC to make this decision, and they can still blame the IOC,” he told Al Jazeera. “I guess if something is wrong, but given that the Games are unpopular among the citizens, then maybe it is a logical thing for the Japanese government to do.”

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