Sponsored by Philip Morris Japan, the report notes that the "2020 Summer Olympic and Paralympic Games in Tokyo are playing a central role in the narrative of Japan's revitalization. The direct economic benefits of this iconic event are forecast to range from ¥30trn (US$282bn) to ¥32trn or around 0.6% of real GDP. The Olympic Games are also viewed by business executives as a great opportunity to boost morale and visibility, to 'catapult the host city into the premier league of cities,'" according to a report that looks into the economic impact of the Olympics.
Moreover, "The cumulative effect of the Olympics brings more important results than simply faster GDP growth. Olympic euphoria has developed into a new national idea, driving the country and its economy forward. 'The Olympics will be a great catalyst, showcasing all of the great things about Japan and Japanese society. There will be a huge positive effect from an incoming tourism point of view, but there is also domestic excitement, that will be created as well,' says Randall G. Wada, CEO of JLT Holdings Japan."
The report encouragingly explains that "this positive trend does not have to stop when the lights go off after the closing ceremony. The legacy created by the Olympics should be enough for the country to start building what we call Japan's next decade" as opposed to the 'lost decades' of economic stagnation in the 1990s and 2000s.
There are challenges, however, such as a rapidly aging population that may adversely impact Japan's next decade. "The statistics are well known: by 2030, more than 30% of Japan’s population—nearly every third person—will be over 65. This is unprecedented in world history. The Japanese government and people are concerned as to whether their society is sustainable with such a demographic structure."
What is more, "The Economist’s Glass Ceiling Index consistently ranks Japan as one of the worst environments for working women among OECD countries." In a chapter on driving growth through diversity and inclusion, the report says "improving conditions for working women and promoting 'total diversity' are crucial for Japan's next decade and beyond. The economic potential is huge, and the socio-demographic implications could benefit society as a whole."
Based on desk research and consultation with experts in Tokyo, the report's key findings include:
- By 2030, more than 30% of Japan's population—nearly every third person—will be over 65, but the rate of aging peaked in the mid-2010s and is now beginning to plateau.
- An aging population presents a market opportunity for companies that can recognize the needs of potential new customers, especially in the technology sector and IT and software industry.
- The number of employees in Japan who are over 65 rose from 5.7m to 8.7m in 2008-18 and their share in workforce will amount to around 20% by 2030.
- Up to 80% of Japanese companies in hospitality, nursing and transportation experience severe lack of workers. However, due to the decline in population, Japan finds itself in the unique position where the labor shortage presents a chance for the development of new automating technologies, without the risk of creating huge unemployment.
- Eliminating the gender employment gap and promoting women to full-time positions can bring Japan a 15% increase in GDP.
- Added value driven by the 4th Industrial Revolution in Japan can be as high as ¥30trn—in terms of economic impact, essentially another Olympics.
- The manufacturing sector in Japan has a very high level of automation potential—at 71%, it is 11% higher than that of the US. By 2025, with the use of the internet of things (IoT) and automating technologies, industries such as construction can improve productivity by 20% and manufacturing productivity can grow by up to 2% per year.
- Japan is lagging in the adoption of digital technologies, but there are still considerable achievements in innovation in Japan, particularly in manufacturing sector.
- The number of international tourists in Japan increased more than six-fold in 2011-18, making Japan one of the top countries in the hospitality industry globally in just a few years.
- The size of Japan’s domestic tourism market still dwarfs the inbound at ¥20.5trn compared with ¥4.52trn. The government is aiming to increase annual revenue from international travelers to ¥15trn by 2030.
- If put together, the opportunities around the silver market, increased productivity, inbound tourism and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn.
The report concludes that "[d]espite serious challenges, Japan has immense potential for the future. If put together, the opportunities around the silver market, increased productivity and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn. This would require more than new programs by the Cabinet Office new strategies by business, however; a shift in perspective and change of mindset are needed to see the risks as opportunities to be realized by society as a whole."
Is your business planning to establish or expand its operations in Japan in the next decade?