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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.

If the Tokyo Games are held without spectators, this will result in ¥1.66 trillion in economic benefits, some ¥146.8 billion less than if they are held with domestic spectators, according to the institute.

Media polls have shown the Japanese public remains concerned over the pandemic. Nearly 60% of respondents in a Kyodo News survey in mid-May said the Tokyo Olympics and Paralympics should be canceled.

Parts of Japan, especially populous areas such as Tokyo and Osaka that have been hit by a resurgence in coronavirus cases, have been placed under a state of emergency. The country's vaccine rollout has been gaining momentum but still lags behind other advanced countries such as the United States and Britain, where signs of some normalcy have emerged.

The United States on Monday advised its citizens not to visit Japan due to the COVID-19 crisis, raising its travel alert to the highest level of 4, while Japanese government officials played down the impact.

The state of emergency, aimed at easing the strain on hospitals treating patients in the affected areas, does not involve hard lockdown measures similar to those in Britain or other countries.

Based on Kiuchi's calculations, the first emergency declaration in the spring of 2020 resulted in an economic loss of around ¥6.4 trillion, and the second between January and March brought about a hit of ¥6.3 trillion. The current declaration, which began in late April, will likely lead to a loss of ¥1.9 trillion, with the amount likely to increase if the government decides to extend it beyond Monday's expiration.

"These estimates suggest that a decision on whether to hold the games or not, as well as whether to limit spectators, should be made based on the impact on infection risks, not from the standpoint of economic loss," said Kiuchi, a former policy board member at the Bank of Japan.

The economy faces the risk of another contraction in the April-June quarter, after it shrank an annualized real 5.1% in the first three months of 2021.

Last week, John Coates, vice president of the International Olympic Committee, said the Tokyo Olympics from July 23 to Aug. 8 would be held even if the capital remained under a state of emergency.

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