Japan Special March 2020


Japan: Olympics postponed as government eyes enormous fiscal stimulus

March 28, 2020

On 24 March, Prime Minister Shinzo Abe announced the postponement of the Tokyo 2020 Olympic Games until the summer of next year at the latest. The move was increasingly expected in the run-up to the announcement, in light of the worsening global coronavirus pandemic; nevertheless, the confirmation still sent shockwaves through the economy, given that Japan has spent tens of billions of dollars preparing for the games and was expected to benefit from an influx of tourists this year.

The postponement has also made the passing of fiscal stimulus measures even more pressing. As such, on 28 March PM Abe announced that the government is preparing a package bigger than the one Japan used to counter the global financial crisis in 2008—which was worth JPY 57 trillion (USD 528 billion)—to be approved at the earliest possible date. This would come on top of monetary policy stimulus announced by the Bank of Japan earlier in March.

Commenting on the economic impact of the postponement of the Olympic Games, Hiromichi Shirakawa, chief Japan economist at Credit Suisse, and Takashi Shiono, Japan economist at Credit Suisse, jointly noted:

“First, any chances for rebounds in the inbound tourism into late summer have virtually disappeared and we now expect the year 2020 to see the number of inbound tourists to decline to around 20 million or by some 40% from 32 million of last year. Second, services expenditure of households will remain weaker for longer as the postponement decision tends to simply imply that control or regulatory policies by the government on social events, gatherings, school operation and so forth will take longer than previously expected until they get normalized.”

PM Abe said the government will draw up a supplementary budget by 7 April and try to get it through Parliament as soon as possible, which will likely be before the end of the same month. PM Abe added SMEs will be offered zero-interest loans and cash payouts will be directed towards vulnerable households and companies. Combined with the monetary policy stimulus announced in March, fiscal stimulus of the size described should help mitigate the fallout from the coronavirus pandemic; nonetheless, they are still unlikely to kick-start growth due to stringent Covid-19 containment measures.

Our Consensus Forecast panelists are currently revising their economic growth projections following recent developments. New Consensus Forecasts will be available from 31 March.

Author:, Economist

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