World Economy

Japan Pondering ‘2020 Problem’

Japan Pondering ‘2020 Problem’Japan Pondering ‘2020 Problem’

Japan is gearing up for the 2020 Tokyo Summer Olympics with gusto, investing in everything from stadiums to electric cars, and expecting an economic bonanza from a construction frenzy and an influx of visitors.

On the face of it, hosting the Olympics is a big win for Japan at a time when its economy seems besieged by intractable problems.

The Bank of Japan estimates the economic perk at $250 billion, many times even the highest estimate of the costs to prepare for and run the event, AP reported.

But for some, 2020 is another manifestation of what has been going wrong in Japan for decades. Instead of modernizing the economy and taking other steps to address the powerful headwinds of an aging population and shrinking workforce, the government has turned again to its well-worn playbook of borrow and hope.

Discussion and fears about what Japan can turn to for an economic lifeline after the Olympics have become so commonplace it’s even been given a name: the 2020 problem.

Japan “will overstretch itself,” William Saito, an entrepreneur and technology expert, said of the spending for the games. “It will quite possibly be the straw that broke the camel’s back,” he said. “Everyone is predicting that it will be that catalyst.”

For the naysayers, preparations for the Olympics have already hit big snags. The design of the main stadium has been redone after a public uproar over its cost. The Tokyo Olympics emblem is being redesigned because of plagiarism allegations.

The dire predictions of what’s in store for Japan after the Olympics range from a collapse in property prices to a financial crisis sparked by the weight of the government’s debt burden, which is the highest in the industrial world at 234% of gross domestic product.

The time limit for getting that debt under control may be running out, said Kazumasa Oguro, professor of economics at Hosei University.

But for all its well-known problems, Japan is still the world’s third-largest economy. Many of its top companies are innovative and dominant globally in their respective industries. Japanese culture exerts a powerful influence worldwide in areas from food to film and a talent for refining and improving on the creations of the West and other cultures has influenced architecture, fashion and other industries.

Masatsugu Doi, the chief operating officer of eWarrant Japan Securities Co., believes many options are available to bolster Japan, ranging from increasing baby sitters to encourage working women, to challenging changes such as raising the pension age to 75.

“We still have time as long as the government acts,” he said.