Japan must look beyond the 2020 Olympics
Prime Minister Shinzo Abe faces important decisions after the Games
The Tokyo Olympics of 1964 were the culmination of two decades of work to reconstruct Japan. It marked a proud return to the international spotlight as visitors rode the new shinkansen high-speed railways and the world watched the Games via the first international satellite broadcasts. Joe Frazier took gold in the heavyweight boxing and Japan delighted as its women defeated the Soviet Union to win the inaugural Olympic volleyball tournament.
For the past eight years, Japan has again been engaged in a project of revival under Prime Minister Shinzo Abe as it seeks to shake off the legacy of the 1990s and 2000s, when the economy was weak and the country lost its sense of direction. That project will culminate with the Tokyo Olympics of 2020, but while this second Olympiad brings a similar sense of pride and renewal, the path forward is less obvious than it was 56 years ago.
The 1964 Games were held in October, but jam-packed sporting schedules mean the 2020 Games will take place in the muggy heat of July and August, which is sure to provoke controversy. Nevertheless, there will be no tales of panic or unfinished construction: most of the venues have already hosted test events. The warmth of the welcome from Japan’s public is not in doubt.
Under Mr Abe, the country is on the up. The economy has performed significantly better in recent years thanks to his stimulus policies, even if it remains far from the Bank of Japan’s 2 per cent inflation objective. Diplomatically, the prime minister has been unusually active and visible for a Japanese leader, forging a notable friendship with US President Donald Trump and improving relations with China, although disputes with South Korea rumble on. He has struck trade deals and made important if not transformational reforms to corporate governance, energy markets, agriculture and working practices.
The question is, what happens after the Olympics, when Mr Abe has to make important decisions about the future, both political and economic? The fear is a loss of momentum as the rate at which the population is ageing, and declining, accelerates in the 2020s.
Politically, Mr Abe has a deadline in the autumn. His term as leader of the Liberal Democratic party — the last allowed under its constitution — expires in autumn 2021. The current term of the lower house of the Diet, Japan’s bicameral legislature, runs out around the same time. If Mr Abe intends to step down as prime minister, the natural time to do so is in the afterglow of a successful Olympics, giving the new leader a year to settle in before facing the voters. If he intends to stay, on the other hand, the way to force through a change in the party rules is to secure a new mandate in a general election first. If Mr Abe does want to continue, he needs to show he is not governing for the sake of it and has an agenda for longer years in office.
Economically, the prime minister needs to make sure there is no return to the contractionary policies of the past. The stated goal is 2 per cent inflation, but with the Bank of Japan having decided the costs of further monetary easing outweigh the benefits, there is no road map to achieving it. The answer is not to abandon the inflation target but rather to make more active use of fiscal policy to support growth. Mr Abe has taken welcome steps in that direction with a recent stimulus package.
The Japanese Olympic Committee has set a target for 30 gold medals at its home Games, up from the 12 it won in Rio de Janeiro in 2016. That is ambitious. But after so many years of economic gloom, it will be good to see an ambitious Japan welcome the world in 2020.