With tomorrow (24 July) marking five years until Japan plays host to the Olympic Games, Genzo Kimura, economist at SuMi TRUST comments on the benefits to the Japanese economy on the road to Tokyo 2020.
Much of the focus this week has been on the cost of the stadium for the 2020 Olympic Games in Tokyo, but this should not detract from the progress already being made for infrastructure preparations as well as the impact of surging numbers of overseas tourists.
With five years to go until the eyes of the world fall on Tokyo 2020, the Abe government is already seeing the benefits of its growth strategy for the economy.
Thanks to the depreciating yen and relaxed visa requirements for the citizens of China and Southeast Asian countries, the number of overseas tourists visiting Japan rose from 8.4 million in 2012 to 13.4 million last year.
Assuming that the current exchange rate is maintained, and using the rate of incoming Asian tourists today, we could see 25 million tourists visiting Japan in 2020 surpassing the target of 20 million set by the third arrow of Abenomics.
The government is stepping-up its efforts to accommodate such large inflows of tourists, with spending on infrastructure development forming a key part of the growth strategy.
Ring roads are being constructed to streamline traffic around the city, with the Metropolitan Inner-City Highway expected to be finished later this year.
The development of coastal areas close to where the Olympic Games are being held is also underway. High tower apartments at Ariake and Toyosu are sold out thanks to high demand from overseas citizens from Asia; especially from Chinese buyers who benefitted from the Beijing Olympics in 2008.
At the time of the Beijing Olympics, apartments in the Chinese capital doubled and in some cases even tripled in value and with prices already on the rise in Tokyo it looks like we could see a similar story in the run up to the 2020 Games.
The updated growth policy released by the Government in June laid out plans to develop Haneda and Narita International airports. A number of ideas are currently on the table including robots to guide passengers at each airport gate.
Toyota has already announced its sponsorship with the international olympic committee to provide an intelligent transport system and small mobility vehicles. This is not just about fulfilling infrastructure demands and the Abe cabinet fully intends to use the Olympics to showcase Japanese technology.