Interviews | Economy | East Asia
The Olympics will end up being a “net negative” for Japan, Hama predicts.
The Tokyo Olympics will begin on July 23, after being postponed for a year due to COVID-19. Despite the delay, the pandemic is still far from over – Tokyo faces a further rebound in cases and more than 70 people associated with the Olympics (both athletes and staff) have been tested positive for COVID-19. Tokyo remains in a state of emergency, and there will be no spectators at the Games, let alone a wave of international tourism.
The diplomat spoke with Noriko Hama, research director at the Center for Economic and Policy Studies at the Tokyo Mitsubishi Research Institute, about the economic impact of the Tokyo Olympics and the impact of COVID-19 on the Japanese economy.
With strict restrictions on international travel still in place and a tight cap on spectators, can the Tokyo Olympics still boost Japan’s economy?
Barely. Many games have moved on to events without spectators. Emergency restrictions are in place for restaurant opening hours and the supply of alcohol. People are discouraged from traveling to Tokyo beyond the prefectural borders. Public screening events were generally canceled. All of these factors will undermine the hoped-for economic stimulus.
Will the Olympics end up being a net positive or net negative for the Japanese economy?
Net negative. Costs are incurred to organize the Games, while the corresponding revenue streams will not be generated given the zero spectator measure. The aforementioned restrictions on dining and travel between prefectures are likely to force even more businesses to close. In these circumstances, I find it difficult to identify any net positive elements arising from the events.
Other than the Olympics, which parts of the Japanese economy have been hit hardest by the COVID-19 pandemic? Have there been any signs of recovery in recent months?
The little ones and the weak were clearly the hardest hit. Again, as I mentioned, restaurants and other small retailers face great challenges. Wholesalers too. In the manufacturing sector, second and third tier suppliers see their activity sharply reduced. Concert workers do not work. On the contrary, the last few months have worsened the situation of all these people given the tightening of the restrictions of the state of emergency.
What steps has the government taken to minimize the economic damage from COVID-19? Are there any other proposals under consideration at this time?
No significant new measures have been introduced. The government is too busy trying to convince the Japanese public that the Olympics are safe and wonderful. One appalling measure they tried to initiate was to get financial institutions to pressure the restaurants they do business with to comply with the no-drink policy. Another idea they had was to order alcohol wholesalers to stop doing business with restaurants that violate the no-drink provision. These two “initiatives” have rightly met with fierce resistance and criticism. So much so that the government was quickly forced to withdraw the measures. A government that comes up with such intimidating and laughable plans cannot be expected to do anything worthwhile in terms of limiting the damage from COVID.
Considering the current economic situation, what is the potential for further economic reforms in the direction of “Abenomics”?
My other name for Abenomics is Ahonomics, whose Aho means stupid, silly, bonkers, etc. in Japanese. The ahonomics has been very damaging to the Japanese economy as it has paid little or no attention to the weakest parts of the economy. The redistribution measures were very visible for their absence in the Ahonomics range. This has not changed under the current Prime Minister Yoshihide Suga. My alternate name for Suganomics is Sukanomics, which the Suka means empty, empty, useless, loser, lottery ticket, etc. in Japanese.