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Postponed Olympics to cost Japan $6 billion - analyst

Video Credit: Reuters - Sports - Duration: 06:42s - Published < > Embed
Postponed Olympics to cost Japan $6 billion - analyst

Postponed Olympics to cost Japan $6 billion - analyst

Japan's economy will take a further hit of $6 billion dollars which is the cost of having to postpone the Tokyo 2020 Olympic Games, according global sovereign analyst Rohini Malkani.

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Postponed Olympics to cost Japan $6 billion - analyst

RESENDING WITH COMPLETE SCRIPT VIDEO SHOWS: INTERVIEW WITH DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, RECENT FOOTAGE OF COUNTDOWN CLOCK OUTSIDE TOKYO STATION STOPPED AND RESET WITH JUST TODAY'S DATE / DOMESTIC TOURISTS GATHERING NEAR SENSO-JI TEMPLE IN TOKYO, RICKSHAW DRIVERS AND TOURIST SHOPS, RECENT FOOTAGE OF TOKYO STOCK EXCHANGE, RECENT FOOTAGE OF PEOPLE IN TOKYO WEARING MASKS, FILE FOOTAGE OF OLYMPIC RINGS MONUMENT IN TOKYO BAY SHOWS: NEW YORK CITY, NEW YORK, UNITED STATES (MARCH 25, 2020) (REUTERS - ACCESS ALL) 1.

(SOUNDBITE) (English) DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, SAYING: "I think there are two ways to kind of look at it.

One is that you know some of the spending will take place next year, so it's not that the postponement of the Games is going to have a big impact.

It probably will be some of the revenues spill over to 2021.

But if one kind of looks at it what is likely to be the impact on the Japanese economy, I've read some studies by some university professors who estimate that the total cost of the postponement of the Games would be to the tune of U.S. dollars 6 billion." 2.

WHITE FLASH 3.

(SOUNDBITE) (English) DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, SAYING: "Yes, so the way that I would look at it is that, I think the money that's been spent is mainly on the investment side of the Games; to kind of build the stadiums etc.

But when one looks at the consumption side, the additional spending which is going to come from the tourists, some of the sponsorship rights, I think some of it could spill over to next year.

So, the way I think I would kind of look at it, it's going to be a delay in the spending.

There clearly will be some additional spending that the authorities will have to take and that you know given the fact that they have kind of set-up the stadiums, set-up everything for the Games beginning this year you're going to have that cost of maintaining the stadiums... so there would be some amount of additional spending or an additional cost to the government as well." 4.

WHITE FLASH 5.

(SOUNDBITE) (English) DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, SAYING: "Over the last couple of years, tourism flows have been increasing in Japan and the last data count was that there were almost 32 million tourists visiting Japan annually.

So, the Olympics were scheduled to be held later this year was supposed to add a further 2 million tourists.

So that's something which will kind of take its toll on the economy." 6.

WHITE FLASH 7.

(SOUNDBITE) (English) DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, SAYING: "The service industry, whether it's hotels, restaurants, trade, tourism, are the sectors which are going to be most impacted by the virus because it's something that you can't basically double the consumption.

Once things kind of recover the second half of the year or see towards the end of the year (now) you can't eat two extra meals or stay two extra nights etc.

So clearly this sector is going to be impacted so what we have seen is that governments all over are trying to make sure that these businesses stay liquid, they are solvent so we are kind of seeing various measures that are being put into place regarding forbearance of loans.

So, I think governments all over are trying to take timely, temporary as well as targeted measures to make sure that once we get over this health crisis in the latter half of the year the businesses that have been impacted will eventually be able to come back into operation." 8.

WHITE FLASH 9.

(SOUNDBITE) (English) DBRS GLOBAL SOVEREIGN ANALYST, ROHINI MALKANI, SAYING: "I would say even before this whole delay about the Olympics, Japan was heading towards a technical recession given the fact that we had a -0.4 print in the last quarter of last year and now given the fact that the virus is taking a much bigger than expected toll on global economies.

Clearly Japan is likely to see basically negative growth in the coming quarters.

I think when we're talking about recession, we should also bear in mind that is it going to be a shallow recession or a deep recession and I think while it's still too early to kind of quantify the impact, I think it's important to know that governments all over are taking timely, temporary as well as targeted measures to contain the impact." TOKYO, JAPAN (MARCH 25, 2020) (REUTERS - ACCESS ALL) 10.

VARIOUS OF COUNTDOWN CLOCK, WHICH HAS STOPPED COUNTING DOWN TO TOKYO 2020 OLYMPICS OUTSIDE TOKYO STATION AND INSTEAD NOW SHOWS CURRENT DATE 11.

PEOPLE TAKING PHOTOGRAPHS OF CLOCK 12.

CLOCK 13.

VARIOUS OF DOMESTIC TOURISTS POSING FOR PHOTOGRAPHS NEAR SENSO-JI TEMPLE 14.

WOMEN WEARING MASKS 15.

VARIOUS OF RICKSHAW PULLERS WAITING FOR CUSTOMERS 16.

RICKSHAW DRIVERS SETTING OFF 17.

TOKYO 2020 BANNER 18.

VARIOUS OF TOKYO 2020 COMMERCIAL ABOVE STREET TOKYO, JAPAN (FILE - JANUARY 17, 2020) (REUTERS - ACCESS ALL) 19.

OLYMPIC RINGS MONUMENT BEING PULLED INTO POSITION IN TOKYO BAY 20.

GUARD SHIP 21.

OLYMPIC RINGS BEING PULLED INTO POSITION 22.

WORKERS GETTING MONUMENT INTO POSITION 23.

VARIOUS OF OLYMPIC RINGS WITH RAINBOW BRIDGE AND TOKYO TOWER IN BACKGROUND TOKYO, JAPAN (MARCH 24, 2020) (REUTERS - ACCESS ALL) 24.

EXTERIOR OF TOKYO STOCK EXCHANGE 25.

SIGN READING (English): "JPX TOKYO STOCK EXCHANGE" TOKYO, JAPAN (MARCH 23, 2020) (REUTERS - ACCESS ALL) 26.

STAFF WORKING DESKS AT TOKYO STOCK EXCHANGE/ JAPAN EXCHANGE GROUP LOGO 27.

VARIOUS OF STAFF WORKING TOKYO, JAPAN (MARCH 20, 2020) (REUTERS - ACCESS ALL) 28.

VARIOUS OF PEDESTRIANS IN STREETS, SOME WEARING MASKS 29.

JAPANESE FLAG ON BUILDING STORY: Japan's economy will take a further hit of $6 billion dollars which is the cost of having to postpone the Tokyo 2020 Olympic Games, according global sovereign analyst Rohini Malkani.

That will be another blow to Japan's government who offered its bleakest assessment on the country's economy in nearly seven years on Thursday (March 26), saying conditions in March were "severe" as the coronavirus pandemic shut down factories and cooled consumption.

The coronavirus pandemic has affected several sectors in Japan over the last few months and the Olympic Games postponement will only add more troubles for the country's hotels, airlines and tourism industry in the second half of the year.

Malkani told Reuters on Wednesday (March 25) that the costs of maintaining stadiums and other infrastructures could cost as much as $6 billion dollars and there will be 2 million fewer people visiting Japan without the Games being held this year.

The DBRS analyst added that a lot of the investment into the Games from stakeholders such as sponsors and tourists would be deferred until 2021 that was not going to help the tourism industry and hotels in the second half of 2020.

Furthermore, in a monthly report released on Thursday, the Japanese government cut its economic assessment and removed language describing the economy as "recovering" for the first time since July 2013.

The downgrade lays the groundwork for Japan to compile a stimulus package next month, which, sources say, will involve spending of at least $137 billion dollars to cushion the blow from the pandemic.

Malkani agreed with that assessment saying Japan will need to take timely, temporary as well as targeted measures to contain the impact.

In February, the government said the economy was recovering moderately, albeit with some weakness among manufacturers.

The government also cut its assessment on consumption, capital expenditure and business sentiment - which all took a hit from worldwide travel bans, event cancellations and supply chain disruptions caused by the pandemic.

Passengers of bullet trains, usually packed with business users and tourists, halved from year-before levels in the first half of March, as companies urged employees to work from home, the report said.

Some department stores saw sales in the first half of March tumble nearly 40% from year-before levels due to a plunge in the number of overseas visitors, it said.

The labour market remains tight and wages are steady, though there is a growing chance jobs and household income could be hit if the outbreak persists.

(Production: Tim Hart)




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