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Tokyo Olympics could seal Japan's revival

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The 2020 Olympics could seal the revival of Japan's long-stagnant economy, analysts say, an echo of the 1964 Tokyo Games that showcased a nation risen from the ashes of defeat.

Staging the world's biggest sporting jamboree "is clearly a plus to (economic) growth" Prime Minister Shinzo Abe told journalists in Buenos Aires, hours after the Japanese capital was named as host.

"Japan has had 15 years of economic stagnation... and we've lost confidence in ourselves. But I hope this will be a chance for us to regain that confidence," Abe said.

In the 1960s, the Games were the coming-out party of a country that had grown to respectability after the ignominy of occupation following World War II.

The 1964 Olympics heralded the arrival of what was to become a huge and vigorous economy -- until recently the world's second biggest -- and one that shook up the global order until it all came to a shuddering halt at the end of the 1980s.

Two decades of anemic growth and investment-sapping deflation saw China push a floundering Japan into third place, as repeated attempts to kick-start the economy did little but add to a mountain of debt.

But Abe's election in December kindled hope of a recovery, and his economic plan, dubbed "Abenomics", has encouraged the green shoots of a recovery that optimists say might really take hold.

Now they hope that a second bite of the Olympic cherry could cement that recovery and recharge a country once known for its economic vigor.

"The most important thing about the 2020 Tokyo Olympics is that it has reduced risks of Abemonics failing in the middle," said Hideyuki Ishiguro, senior strategist at Okasan Securities.

The Tokyo Metropolitan government estimates that hosting the Olympics will see about three trillion yen ($30 billion), or less than one percent of Japan's Gross Domestic Product, being spent in the seven years to 2020.

But Ishiguro says the real impact will be much bigger.

"The Tokyo government's estimate doesn't include redevelopment of roads and other social infrastructure in the greater Tokyo area, nor the government's plan of repairing and rebuilding infrastructure nationwide," he said.

The stock market in Tokyo was quick to react, opening up almost 3% on Monday as investors speculated there would be a boom in construction, real estate and sportswear firms.

Ishiguro said the actual economic impact of Tokyo 2020 will not be as large as that from the 1964 Games, when the country had to kit itself out with all manner of infrastructure -- including the impressive bullet train network.

In the early 1960s, "the cost of building facilities for the Games was just about 30 billion yen, but including construction of infrastructure such as expressways, water and sewage, it amounted to 960 billion yen," Ishiguro said.

"Likewise the synergy effect this time will be much bigger than Tokyo's estimate."

Daiwa Securities strategist Eiji Kinouchi forecasts the knock-on effect of the Olympics will be 150 trillion yen, comprising some 55 trillion yen in investment and a bump in tourism worth a whopping 95 trillion yen between now and then.

Japan's plan to double the number of foreign tourists by about 2020 "will be easier to achieve with the Olympics," Kinouchi said.

The tsunami of 2011 and resulting nuclear disaster at Fukushima precipitated a sharp drop in the number of foreign visitors, although this has already begun to recover, thanks in part to a much weaker yen.

But the lingering catastrophe, including regular revelations of new problems at the site, could act as a brake, especially because of its affect on international confidence, experts say.

Abe sought to allay fears in his final pitch to the International Olympic Committee in Buenos Aires, stressing the plant, 220 kilometers from Tokyo, was under control.

"It has never done, and will never do, any damage to Tokyo," he said.

Analysts say public proclamations like this will help keep Japan focused on clearing up the mess.

Most commentators agree that one of the most important boosters that staging of the Games will bring is offering a confidence prop to both investors and consumers.

"The Abe administration can't avert painful reforms such as of tax to achieve sustainable growth," said Yoshikiyo Shimamine, senior economist at the Dai-ichi Life Research Institute.

"If the hosting of the 2020 Olympics proves successful in every aspect, then it will impress the world with the image that Japan is back from two lost decades," Shimamine said.

© 2013 AFP

©2024 GPlusMedia Inc.

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1964: Money printing and central banking was starting in full swing. Asian production was destroyed, and the game was rigged in favor of Japan to sell products to U.S. AND a growing Europe. The world was flush with free money from the Fed.

2020: Money printing has passed the point of not return, and there's plenty of other countries that can make what Japan makes, and most countries are too broke to buy anything.

Something tells me this time around, the simple fact of having the Olympic games (as demonstrated by the recent tendency of the Olympics to leave a trail of crushing debt) won't have such a wonderful effect.

But, it certainly WILL give Japan Inc. a ready excuse to borrow borrow borrow and build build build.

2 ( +5 / -3 )

The Olympic games in 1964 was not the festival of money, corruption, and spreading one's legs the widest like it is today. The Olympics then were still amateur events, and the competitiors were anonymous young people who were mostly students and soldiers. There were no company logos on shoes or uniforms, no advertising was permitted at any venue. The Olympics were not a multi-billion dollar industry where the likes of Coca Cola and McDonald's paid $100,000,000 each to be main sponsors. The Olympics were more like the great exhibitions of the last century, where cultures interchanged ideas, and nations promoted themselves.

In 1964 there was still rubble from the war to be found around Tokyo. Japan was the world's largest manufacturer of junk; tin toys, steel which became rusty within hours, radios made of cheap plastic which warped when exposed to sunlight, etc. With few exceptions, the "Made in Japan" label was not something which people liked to find on a product they had bought.

In 1964 Japan was what we would call a developing country. There was no logical reason to let Japan host the games at the time. In 1964 air travel was not cheap, and Japan was a remote and exotic place. Tokyo had no real infrastructure at the time, and none of the necessary facilities in which to hold the events. The tallest structure in Japan was Tokyo Tower, and at the time it dominated the landscape, most of the buildings in the city were two-story houses, many not much more than wooden shacks (a few of which can still be seen today if you know where to look).

It was the the 1964 games that pushed Japan into being a fully developed country. The buildings and facilities built for the games were remarkable. The people of Japan had overcome great hardship during the war, and in 1964 most of these people were still around. Memories of the war, and a fair amount of shame still lingered, no one wanted to look back, and the 1964 games were a good way to make people look forward.

The games were a success, and made Japan realize that they were capable of performing great tasks, which was something which they had not felt since the pre-war days. The 60's were the days of great optimism, and the road to the future was bright with growth and opportunity.

Unfortunately, the same is not true today.

9 ( +10 / -1 )

when has hosting the olympics ever been long a term economic boost to the city involved? they'll be lucky if they break even

3 ( +3 / -0 )

I hope Tokyo enjoys the success that London did last year. After the doom and gloom of the last couple of years, something to look forward to will be good for Japan.

Now where is my DVD of ALWAYS 三丁目の夕日'64

2 ( +2 / -0 )

Whilst it may not be as transformative as it was in 1964, it will be very good for Japan, and that's something people here should be celebrating.

-2 ( +2 / -4 )

Tokyo Olympics could seal Japan's revival

Or the final nail in the coffin before Japan sinks into mediocrity and irrelevance. If the Olympics can bring about a sea change in attitudes and bring back the innovation that made Japan the envy of the world they will be the catalyst for change, if they just fund the corrupt politicians and the construction industry they will be the straw that breaks the camel's back. Japan is at a crossroads, many of the big corporations that once built this country with innovation and open mindedness are now strangling creativity and stagnating. This is an inevitable law of nature and it happens in every successful state which has too much central authority, they kill diversity and become frightened of change. Creativity and change always starts with the young and the young in Japan have been castrated by the old who hold the power and abhor change. I really hope that the Olympics is a positive and non-threatening version of Perry's 'black ships' and the the international event is the impetus for a change in mindset. I hope so. Japan is going to change in a drastic way one way or another but it is up to them which direction they want to change. Do we follow the old with their old ideas and stagnation or the young.

On a final note, pouring concrete all over the place to build for these Olympics will not help Japan's economy in the long term, construction is the problem in this country and not the solution. They continue to solve their problems with the same mindset they had when they created them, which is insanity. But these people are addicted to construction money and will continue to take that money even when they are standing in the same sinking ship and are drowning along with everyone else.

2 ( +4 / -2 )

The 2020 games will be a shot in the arm to the national economy. But realistically, the shot will be nothing more than the final dose of morphine given to a patient with an advanced case of cancer. The patient may feel better for an hour or two, but he is no less doomed.

The decline of Japan is based on fundamental problems that no amount of stimulus or major sporting events can solve. Economic growth demands an environment which Japan cannot provide. It demands a more-or-less free market, without a large burden of taxes and regulation. It demands that all people have an equal opportunity to participate in the market, as buyers and sellers. It demands a steady stream of ambitious people who are willing to take risks. Lastly, it demands an environment where steady growth is possible.

In an age of decreased childbirth, declining populations, and tough immigration policies, domestic economic growth is not possible. In a culture where children are taught not to be the nail that sticks out, where failure is unacceptable, and where the company you work for is more important to other people than your character, few people are willing to go out on their own and create the new businesses which will employ later generations. Cronyism and collusion have created an unfair environment for would-be small businesspeople, and have kept prices artificially high for the common people. And, lastly, in an economy where the government collects most of the fruits of the people's labor, yet still manages to acquire a debt two-and-half times the size of GDP, it is not possible for businesses, companies, or individuals to aspire to financial success.

Abe, his predecessors, and their cronies are mainly the cause for the problems Japan now faces. The people themselves deserve some responsibilty for not holding their politicians and employers to account for their actions. They did nothing in the past, and are doing nothing now.

The 1964 games heralded Japan's great rise, the 2020 games may herald Japan's great fall.

1 ( +2 / -1 )

@sangetsu03

I largely agree with you. Especially this:

Abe, his predecessors, and their cronies are mainly the cause for the problems Japan now faces. The people themselves deserve some responsibilty for not holding their politicians and employers to account for their actions.

The question is what will Japan do about its debt? default down the road, inflate their currency or other??

0 ( +0 / -0 )

The people themselves deserve some responsibilty for not holding their politicians and employers to account for their actions. They did nothing in the past, and are doing nothing now.

The people 'themselves' deserve a lot of responsibility. In the 21st century they have yet to shed the image of the vassal of the daimyo, they are aloof, fail to vote in elections, make their voices be heard and obeyed.

0 ( +0 / -0 )

Not really ! ! !

The whole country ?

Hmmmmmm, that's hard to swallow

0 ( +0 / -0 )

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