The Nomura Research Institute (NRI) has estimated that cancelling the upcoming Tokyo Olympics and Paralympics would cost Japan 1.81 trillion yen, the equivalent of $17 billion.
Japan is currently struggling to contain the spread of the COVID-19 virus, and only 5% of the population is fully vaccinated, leading many to question whether the rescheduled games should go ahead.
However, the NRI’s research also suggests that there is a risk of an even bigger economic loss should a fresh state of emergency be declared after the games due to an increase in COVID-19 causes during the event.
“Even if the games are cancelled, the economic loss will be smaller than (the damage done by) a state of emergency,” Takahide Kiuchi, Executive Economist at the NRI remarked, speaking to Kyodo News.
The institute has also estimated that if the games go ahead without spectators, the tournament will generate around 1.66 trillion yen, a drop of 146.8 billion yen than if the event went ahead with domestic spectators.
Additionally, Kyodo News has separately reported that Tokyo Governor Yuriko Koik is planning on asking the government to extend the ongoing coronavirus state of emergency past the deadline of 31 May, with the Summer Games just two months away.
Japan’s Prime Minister, Yoshihide Suga, is expected to make a decision regarding the planned extension on Friday 28 May.
Kiuchi and the NRI calculated that the first emergency declaration in 2020 – coinciding with the rescheduling of the Olympics by one year – led to an economic loss of roughly 6.4 trillion yen, whilst the second state of emergency between January and March resulted in a loss of 6.3 trillion yen.
The group further estimates that the third and current declaration, beginning in late April, will lead to a 1.9 trillion yen loss, a figure which will continue to increase if the emergency continues beyond 31 May.
“These estimates suggest that a decision on whether to hold the games or not as well as to limit spectators should be made based on the impact on infection risks, not from the standpoint of economic loss,” Kiuchi added.
Although the International Olympic Committee (IOC) has agreed to vaccinate Olympics athletes in cooperation with American pharmaceutical corporation Pfizer, public opposition to the games continues to rise, with IOC President Thomas Bach postponing his visit to the site of the event.