Canceling the Tokyo Olympics and Paralympics this summer would cost Japan around ¥1.81 trillion ($17 billion), a Nomura Research Institute estimate showed Tuesday, as Japan scrambles to curb coronavirus infections with the major sporting event now just two months away.

The institute warned of an even bigger economic loss if a fresh state of emergency is declared to cope with another spike in coronavirus cases after the Tokyo Olympics and Paralympics have been held.

"Even if the games are canceled, the economic loss will be smaller than (the damage done by) a state of emergency," Takahide Kiuchi, executive economist at the NRI, said.