Hosting the Olympic games, either Summer or Winter Olympics, is a huge image booster for cities, but also for the whole country. Many politicians and governors are keen to point to the economic impulse the Olympics bring, for instance due to a large number of tourists which will visit the city and country. Now, the Bank of Japan (BoJ) calculated that the 2020 Summer Olympics hosted by Tokyo will bring as much as 30 trillion yen ($249 billion) to the land of the rising sun. Driven by construction investment and an increasing number of tourists, Japan’s gross domestic product (GDP) will grow at least an additional 0.2-0.3% per year, according to the central bank. Especially 2017-2018 will see higher growth, up an additional 0.6% compared to 2014 due to the preparations.
That is exactly the kind of boost the Japanese economy can use. Struggling with a long period of absent growth and the threats of deflation, higher demand is very welcome. The higher growth may offset the negative effects of a sales tax increase planned in 2017. The Japanese government, which requested the BoJ-study may be pleased with the report. Total investment related to the games will likely reach 10 trillion yen ($83 billion). However, it is to believe that this number will come in much higher, since many of the projects, such as new venues and infrastructural works, are keen for cost overruns. This already led to a new cheaper main stadium design, where the original price-tag increased to 6 times the original estimate.