No Audience, Negative Public Opinion, and Corporate Neglect
Severe Economic Impact Expected
[Asia Economy Reporter Kwon Jae-hee] As the Japanese government poured $20 billion (about 23 trillion won) into the Tokyo Olympics and Paralympics, concerns are rising that the deficit will widen due to the no-audience hosting, negative public opinion, and corporate boycott. It is feared that this will not only disrupt the Suga Cabinet's plan to seek economic recovery through the Tokyo Olympics but also shake the status of Japan, the world's third-largest economy.
According to the Wall Street Journal (WSJ) on the 20th (local time), the official budget related to the Tokyo Olympics announced by the Japanese government was $15.4 billion, but additional expenditures have pushed the total to over $20 billion. This is three times the $7.4 billion initially submitted to the International Olympic Committee (IOC).
However, with the spread of COVID-19 leading to the unprecedented decision to hold the games without spectators, concerns are emerging that the economic benefits will be replaced by a growing deficit. First, ticket revenue disappeared due to the no-audience policy, and as public opinion worsened regarding the hosting of the Tokyo Olympics, even sponsor companies have withdrawn their advertisements. Toyota Motor Corporation, classified as the highest-level sponsor of the Tokyo Olympics, announced on the 19th that it would suspend TV advertisements related to the Olympics within Japan. Toyota did not disclose the reasons for withdrawing the ads, but it appears to be a judgment that continuing as a sponsor amid unfavorable public opinion could damage the company's image.
Jun Nagata, Toyota's public relations executive, evaluated in an online press conference, "The Tokyo Olympics are increasingly becoming an Olympics that is difficult to understand from various perspectives."
The Nihon Keizai Shimbun referred to this as the "Toyota Shock," reporting that there is anxiety and speculation that "Toyota might know some unknown adverse factors."
Secondary economic effects also seem unlikely. Accommodation facilities located in Tokyo, where the Tokyo Olympics are held, invested in facility renovations in preparation for the Olympics, but since the Japanese government decided on no-audience hosting on the 8th, cancellations and reductions in accommodation fees have continued. According to a report by Nihon Keizai Shimbun citing the accommodation reservation site Jalan, the price for a one-night stay at hotels located in central Tokyo dropped sharply from 54,000 yen on the 30th of last month to 18,000 yen on the 18th.
Concerns are also emerging about serious aftereffects due to the poor performance of the Tokyo Olympics. Japan ranks third in the world by nominal Gross Domestic Product (GDP), following the United States and China, and if Japan suffers economic damage from the Olympic aftereffects, it is expected to have a considerable impact on the global economy.
Yoichi Nagaya, an editorial board member of Nihon Keizai Shimbun, pointed out in a column, "As the failure of the Tokyo Olympics was anticipated, the Japanese stock market has been showing weakness day after day," adding, "Global investors' anxiety about the world economy and the performance of Japanese companies is growing." He further noted, "Especially companies suffering from sluggish domestic demand after the disappearance of the Olympic boom have seen their market capitalization significantly decrease."
The WSJ analyzed, "Japan wanted to show through the Tokyo Olympics that despite population decline and a mature economy overshadowed by China, it remains a global economic power, but now the pressure on Japan's leader to maintain his position has only increased."
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