Japan anticipates Olympic boost, but Fukushima shadows linger
Japan savored its victory on Monday in the race to host the 2020 Olympic Games, anticipating an economic boost to spur its revival from two decades of stagnation and help it recover from the devastating 2011 earthquake and tsunami.
The decisive win over rivals Madrid and Istanbul is also likely to strengthen the fortunes of Prime Minister Shinzo Abe, who put his reputation on the line in a bold gamble that victory would boost national confidence, a key ingredient in the success so far of his aggressive pro-growth policies.
The economic impact of the win was estimated by the Tokyo bid committee at more than 3 trillion yen ($30 billion) with the creation of 150,000 jobs. If the Nikkei stock index follows the examples of the London and Athens bourses after those cities won the games, it could see a one- to three-month rally.
But Tokyo, which in 1964 became the first city in Asia to host the Olympic games, won the right to host the world’s biggest sporting extravaganza despite concerns over the leaking Fukushima nuclear plant 140 miles from the Japanese capital.
The plant’s operator, Tokyo Electric Power Co (Tepco), has been forced to reverse denials and admit that hundreds of tons of radioactive water are pouring into the Pacific Ocean each day. Radiation levels have spiked.
Abe said in Buenos Aires, where Tokyo’s victory was announced by the International Olympic Committee, that the plant is “under control.” But he added that Tokyo will have to work to win the world’s trust in the wake of the worst nuclear disaster since Chernobyl 25 years earlier.
“I would like to state clearly that there has not been, is not now and will not be any health problems whatsoever,” Abe told a news conference. “Furthermore, the government has already decided a program to make sure there is absolutely no problem, and we have already started.”
Despite such assurances, South Korea on Friday extended a ban on Japanese fishery imports to a larger area around the crippled Fukushima plant due to concerns over the radiation. China has banned imports of dairy, vegetable and seafood products from at least five Japanese prefectures since the 2011 disaster.
Tokyo pledged last week to spend nearly half a billion dollars on cleaning up the plant, with critics saying the announcement was aimed at the Olympic vote.
Some of the estimated 2,000 people gathered at a Tokyo park to wait for the Olympics announcement, which came in around dawn on Sunday, said the games might bring enough international attention that the nuclear problem will be properly dealt with.
“Tepco has not been clear about a number of things, and maybe now there will be enough foreign pressure to get this thoroughly taken care of,” said Yumiko Okada, 51, who assists her husband, a comic illustrator, with his business.
“Now the eyes of the world will be watching.”
Confidence, stocks likely to climb
To be sure, rivals to host the games Madrid and Istanbul were also wrestling with their own demons; the Spanish capital in the form of recession and the Turkish city with the spectre of a military strike on neighbouring Syria and internal unrest.
Many in the Tokyo park were hopeful that Japan’s win would boost confidence overall, show that the country is back on the world stage after the economic dark times known as the “two lost decades,” during which China overtook it to become the world’s largest economy after the United States.
“It is a very good chance for Japan to have a rebirth for further economic development – and at the same time, Japan these days has lost the samurai spirit,” said Kazuo Otsuki, 78, who said he was glad to have a third chance to see the Olympics in Tokyo. The 1940 Olympics had been set for Japan but were canceled due to World War Two.
“Japanese people are wondering what to do and they are still astray these days.”
Since coming to power in December, Abe has promoted aggressive monetary and fiscal policies that have raised some confidence Japan can emerge from its years of stagnation.
Now the Olympics success could boost confidence further and buying of stocks, with many foreseeing increased consumption across a broad swathe of the economy.
The Nikkei rallied for a month after Japan’s Nagano won the right to the 1998 Winter Games and one analyst predicted it could rise by more than 10 percent in the short term.
A Tokyo Olympics stock index of 79 companies that could benefit from the Games, compiled by Okasan Securities, has already risen about a half this year, gaining more than the broader market’s increase of about a third.
Realtors, anticipating development of Tokyo’s downtown waterfront area – where the Olympic Village will be located – are especially hopeful.
“We in the property sector are expecting this to become a chance for Tokyo to take its development as an international city to a level higher, in the face of the increasingly severe competition from other Asian cities,” said Mitsubishi Estate Co Ltd, in a statement lauding the decision.
An economic lift might also give Abe the final impetus he needs to make a decision on a planned increase in the national sales tax, Japan’s biggest attempt in years to rein in its runaway public debt. The decision is expected early next month after Abe has weighed up whether the economy is strong enough to absorb the tax hike.
“Think of the overall economic boost they predict, the 3 trillion yen and all those jobs,” said Masaharu Ota, a 63-year-old advertising executive. “That will give people motivation even if the sales tax goes up in April.”