Sound handling of coronavirus pandemic and legacy of crisis management allows Japan to prepare for rebound—whether rescheduled Olympics happens next year or not. 

This was the week that Tokyo was due to welcome the world to the Games of the 32nd Olympiad—a summer celebration of athletic achievement to inspire a global audience. The city’s metropolitan government had set aside billions of yen to cover the costs of staging this quadrennial sporting showpiece—officially branded Tokyo 2020.

But for the first time in history, the Olympics and Paralympics were postponed, as opposed to cancelled. The Games was called off in 1940 because of World War II, when ironically Tokyo was also the host city. They were also cancelled in 1916 and 1944 due to war.

This time it was a coronavirus pandemic that has scuppered plans. Tokyo has rescheduled the Games for July/August 2021—almost exactly a year later. Still branded Tokyo 2020, the rejigged event is being billed as “a beacon of hope to the world during these troubled times.”

But without development of an effective vaccine, it’s hard to anticipate the Games being held next year with any confidence. The virus continues to wreak havoc on economies around the world, which in many cases have emerged from lockdowns only to face renewed outbreaks.

Japan itself is experiencing a renewed spike in infections. As an ageing society with more than a quarter of its population 65 or older, it remains especially vulnerable to Covid-19. Yet it has reported just 21,500 infections and fewer than 1,000 deaths—remarkably low rates in relation to elsewhere.

Encouragingly, Japan’s government has not had to resort to extreme lockdown measures, which partly explains why the drop in economic activity in Japan differs from elsewhere.

The fact is, Japan has a plan. Instead of randomly testing people it has focused on vigorous contact tracing to target and isolate potential super-spreaders. Lockdowns only seem to halt the spread of this virus temporarily. When they’re lifted, the spread resumes.

In its favor, Japan has well-established mechanisms to cope with large shocks to the economy, chiefly due to the frequency of natural disasters. It also has ample experience of mobilizing fiscal resources, borne from decades of economic stagnation.

To counter the Covid-19 impact, the government has unveiled $1 trillion in stimulus and relief packages—close to 20% of national economic output. At the same time it has presented a new growth strategy—to promote cashless payments, digitization and diverse work styles. As a country heavily reliant on cash, this will present a challenging transition. But Japan has undergone a number of fundamental shifts in the past, and emerged stronger.

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