Japan is gearing up for the 2020 Tokyo Olympics with gusto, investing in everything from stadiums to electric cars, and expecting an economic bonanza from a construction frenzy and an influx of visitors.
On the face of it, hosting the Olympics is a big win for Japan at a time when its economy seems besieged by intractable problems. The Bank of Japan estimates the economic perk at 30 trillion yen (USD 250 billion), many times even the highest estimate of the costs to prepare for and run the event.
But for some, 2020 is another manifestation of what has been going wrong in Japan for decades. Instead of modernizing the economy and taking other steps to address the powerful headwinds of an aging population and shrinking workforce, the government has turned again to its well-worn playbook of borrow and hope.
Discussion and fears about what Japan can turn to for an economic lifeline after the Olympics have become so commonplace it’s even been given a name: the 2020 problem.
Japan “will overstretch itself,” William Saito, an entrepreneur and technology expert, said of the spending for the games. “It will quite possibly be the straw that broke the camel’s back,” he said. “Everyone is predicting that it will be that catalyst.”
In his concerns, Saito is joined by a chorus of doomsayers. The title of one recent book screams: “Japanese Land Prices Sink to a Third of Their Value! The Crisis That Comes After the 2020 Tokyo Olympics.”
Prophetically, for the naysayers, preparations for the Olympics have already hit big snags. The design of the main stadium has been redone after a public uproar over its cost. The Tokyo Olympics emblem is being redesigned because of plagiarism allegations.
And the organising committee has not disclosed an official estimate of costs, saying it’s still trying to figure it out and did not know when such a number would be ready.
It has acknowledged the cost will be considerably higher than the 350 billion yen (USD 3 billion) it gave when the city was bidding.
The dire predictions of what’s in store for Japan after the Olympics range from a collapse in property prices to a financial crisis sparked by the weight of the government’s debt burden, which is the highest in the industrial world at 234 per cent of gross domestic product.
The time limit for getting that debt under control may be running out, said Kazumasa Oguro, professor of economics at Hosei University.