Is there a real possibility that the Olympic Games – scheduled to take place in Tokyo this summer – could be cancelled, postponed or relocated due to the coronavirus? Or are such suggestions simply scaremongering? Losing the Olympics would be a disaster for Japan which, as Duncan Bartlett reports, has suffered several recent blows to its economy and reputation
Since the outbreak of COVID-19 was declared a global health emergency, the International Olympic Committee has been faced with the arduous task of deciding if the Tokyo Olympic Games should go ahead this July.
Outside of mainland China, Japan is one of the countries worst affected by the coronavirus epidemic. The principle concern is that during a huge sports gathering, the virus could spread further, especially as China is planning to send more than 600 athletes to the Games, along with a large contingent of supporters.
In response to heated speculation in the press and on social media, the head of the coordinating commission of the International Olympic Committee, John Coats, denied that the games are in jeopardy. ‘The advice we have received from the World Health Organisation is that there is no case for a contingency plan to move or cancel the Games,’ he told reporters in Tokyo.
Unlikely as a cancellation would be, it would not be without precedent. The Olympics have been cancelled five times in the past, including during two world wars. There was also debate about the viability of the Rio Olympics four years ago because of a mysterious virus called Zika, which was blamed for causing birth defects.
At the press briefing in Tokyo, John Coats promised that lessons would be learned from Rio. ‘The World Health Organisation pointed out the likelihood of Zika being a problem at the time of the Games was very low,’ he said. ‘But we did lose some athletes and we didn’t communicate the information well enough.’
Rory Green, the China and North Asia Economist at TS Lombard, says that if the Olympic Games were to be cancelled, this would have a very serious impact on the Japanese economy.
‘There has been an expectation that the Games will spark an increase in domestic demand in Japan. There’s been a lot of government investment already in infrastructure and also investment by the private sector, for example in increasing room capacity in hotels,’ he says. ‘The Olympic Games are also a branding campaign for Japan Inc and an attempt to restore the national image of the country, as well as to give a shot in the arm to the whole economy.’
Recently, the media’s coverage of Japan’s troubles has focused on the fate of passengers on the Diamond Princess cruise ship, docked in Yokohama. Initially only one person on board appeared to be affected by the coronavirus. Yet as the quarantine period continued, the infection spread to around 200 passengers.
As a result, the United States arranged an emergency evacuation of 328 US citizens who were on board. These were people who had tested negative for the virus. On returning to America, they faced two weeks of quarantine at military bases in California and Texas.
The unfortunate passengers who tested positive for the virus were told to remain in Japan and to undertake medical treatment. Australia, Britain and Canada also took emergency action to get their citizens out of Yokohama and back to their home countries where possible.
The health emergency is another blow to Japan’s beleaguered economy. The Financial Times warned that Japan ‘is expected to enter a technical recession as the impact of the coronavirus threatens to compound a dire final quarter of 2019, which saw the economy shrink at an annualised rate of 6.3 percent’.
This was due to a number of problems which occurred late last year, including a rise in sales tax, damage wrought by typhoons and unusually warm winter weather.
However, it is COVID-19 which causes the most concern for businesses. The closure of factories has disrupted the supply chains of many Japanese companies which use China as their manufacturing base. Furthermore, people from China have been asked not to take group trips abroad, damaging Japan’s tourism sector, which welcomed more than a million visitors from China last year.
Governments and central banks in Asia are considering further economic stimulus programmes to try to prevent a regional recession. Rory Green predicts a more or less simultaneous response. ‘Because the virus is spreading throughout the region, we expect all the Asian countries to take similar initiatives at around the same time,’ he says.
Green points out that stock markets have held their ground throughout the crisis, suggesting that most investors expect the shock to be temporary. ‘Looking beyond the first quarter of this year, there are no fundamental changes to people’s assumptions about the outlook for long-term growth or the earnings of companies.’
Welcoming President Xi
A coordinated response would require Asia’s leaders to communicate and cooperate. Unfortunately, there is now a question mark over the visit to Tokyo by China’s President Xi Jinping in April. The Japanese government said in February that the trip is still scheduled to take place later this year but added that it is ‘closely watching developments’.
The head of the World Health Organisation, Tedros Adhanom Ghebreyesus, supports China’s actions to try to prevent mass movements of people. He has also praised Chinese scientists for identifying the pathogen of the virus and rapidly sharing its sequence with experts in other countries. This speeds up the process of diagnosis and helps in the quest for a vaccine or cure. Japanese doctors are now planning to use HIV medications to treat patients infected with coronavirus. However, it is not clear how long it will take for such a treatment to receive regulatory approval.
One piece of encouraging news, according to the World Health Organisation, is that data suggests four out of five people infected with COVID-19 go on to develop a mild form of the disease. Many are cured quickly, especially when diagnosed early.
That may provide some relief for the poor people in Japanese hospitals who have tested positive for the virus but who are not allowed to return to their homes.