Hopes of Olympic boost for Japanese economy

Japan’s economy is set to receive a welcome boost in the run-up to the 2020 Tokyo Olympic Games, offsetting some of the impact of a sales tax increase scheduled for 2017, according to the country’s central bank.

Tokyo residents cheer as the city is named host of the 2020 Olympics. Picture: Adam Pretty/Getty Images

It said the sporting event is to lift the country’s economy by 0.2 to 0.3 percentage points on average every year until 2018, with investment in new hotels, venues and infrastructure related to the Olympics set to amount to 10 trillion yen (£55.7 billion) by 2020.

This investment, along with spending by overseas visitors, will add up to 30 trillion yen to Japan’s gross domestic product between now and 2020, equivalent to about 6 per cent the size of the economy.

The Bank of Japan said: “To sustain the stimulus effect of the Olympics after it’s over, there’s a need to take steps to strengthen Japan’s growth potential and dig up new demand that can substitute for (the drop in) construction investment.”