The 2020 Tokyo Olympics and Paralympics are expected to generate from ¥25 trillion ($208 billion) to ¥30 trillion in sales and revenue for the economy from 2014 to 2020, the Bank of Japan said Monday.
The estimates reflect an increase in infrastructure investment related to the sporting extravaganza and tourism, the central bank said.
Tourism has been surging, and visitors to Japan are expected to reach 33 million in 2020 if the current trend continues, surpassing the government’s goal of 20 million by that year, the BOJ said.
“This is a reasonable estimate,” said Koya Miyamae, an economist at SMBC Nikko Securities Inc. “There is no doubt that the Olympic Games is good news for the BOJ” as it will boost demand, he said.
Preparations are already beginning. Tokyo will spend ¥45.2 billion on fuel-cell vehicle subsidies and hydrogen refueling stations for the Olympics as part of Prime Minister Shinzo Abe’s plan to reduce Japan’s reliance on nuclear power, a city official said in January.
The central bank said the sporting events are projected to lift gross domestic product by around 1 percent in 2018, when construction investment will peak, compared with 2014. That corresponds to about ¥5 trillion to ¥6 trillion.
The BOJ estimated ¥10 trillion will be spent on the main Olympic stadium and related facilities, as well as infrastructure, by 2020.
In addition to those economic effects, further growth can be expected from tweaking the government’s growth strategy to take advantage of the events, the BOJ said.
It also said more than 700,000 workers will be needed altogether in sectors from construction to tourism for the event, raising the need to better utilize Japan’s women and elderly.
But the BOJ also warned that the figures were subject to change.
“These are rough calculations,” a BOJ official said.
Tourism is climbing at a dramatic pace. In the first 11 months of the year, there were nearly 18 million visitors, up 47.5 percent from the same period last year and representing all-time high, according to the Japan National Tourism Organization.
Their spending totaled ¥1 trillion from July to September, up 81.8 percent from the same period last year.
Chinese travelers, who account for the bulk of the tourists and whose heavy spending has inspired the slang term bakugai, or explosive buying, also spent the most in the quarter, dropping ¥466 billion in Japan.
While economists deny tourism alone is large enough to become a key driver of the economy, they acknowledge it is a positive factor in an economy with few strong engines.
“Inbound tourism should contribute to revitalization of local economies,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute, referring to one of Abe’s stated priorities. “I think demand from inbound tourists will benefit areas that have popular tourist destinations.”