Over the weekend, it was announced that Tokyo had won its bid for the 2020 Olympics. This should be a big positive for Japanese people and their economy.

Just as in London, the Olympics are likely to increase the promotion of sports throughout the country and create something of a feel good factor.
Spending on Olympic buildings and facilities is expected to be ¥455bn (£2.9bn).

The main costs are the new iconic Olympic stadium, nine other venues and the athletes’ village. Tokyo’s bid envisages a low-impact compact Olympics with many of the 1964 facilities being reused. 85% of the venues are within 8km of the Olympic village, which will be situated in the Tokyo Bay area.

A further ¥552bn (£3.6bn) has been earmarked for transport expenditure, some of which is already in progress. The total budget of approximately ¥1 trillion is about 0.2% of Japan’s current GDP. Overall, securities company Nomura estimates that the impact of the Olympics will be 0.5% of GDP, which in number terms is pretty negligible.

However, the social impact is likely to be much more positive. I believe winning the Olympic bid will improve confidence among the Japanese and the feel good factor should make Prime Minister Abe even more popular.

This increased sense of confidence and purpose among Japanese people should also mean that Abe’s and Bank of Japan Governor Kuroda’s pro-growth policies will become much more effective. The Olympic bid decision will, in my view, also give increased force to Abe’s “third arrow” reform policy and further drive his initiatives for PFI (private finance initiative) and PPP (public private partnership) funding.

So, just as the 1964 Olympics demonstrated that Japan had joined the ranks of industrialised nations, by 2020 I expect that the Olympics should enable Japan to show that the economy is back in shape following the 2011 tsunami and the decades-long economic crisis.

Simon Somerville is manager of the Jupiter Japan Income fund