Canceled Global Gatherings Take Economic Toll

The postponing of major global events such as Dubai’s Expo 2020 and this year’s Tokyo Olympic Games will hit host economies hard.

The Covid-19 pandemic has disrupted gatherings of all kinds. But the postponing of major global events such as Dubai’s Expo 2020 and this year’s Tokyo Olympic Games threatens to hit those host economies hard, with growing uncertainty about when the outbreak will ease.

Expo 2020’s steering committee says it will explore a yearlong deferral of the event with Bureau International des Expositions, the Paris-based governing body of World Expo. Dubai depends hugely on tourism, and estimated that Expo 2020 would have attracted 25 million visitors.

The sudden grounding of Emirates Airline’s fleet of 115 Airbus A380 and 155 Boeing 777 aircraft in March and a ban on incoming passengers has stoked concerns over Dubai’s ability to service looming debt maturities. Although authorities agreed to shield Emirates, the carrier requires billions of dollars in additional loans.

Memories of Dubai’s 2009 financial meltdown linger amid a likely wider debt restructuring. London-based Capital Economics estimates government-related entities have debts of $71 billion with approximately $43 billion, or 40% of GDP, in payments due before 2024. “The yield of a dollar bond issued by a subsidiary of Investment Corporation of Dubai surged from 4% to over 16% in recent weeks,” Capital Economics said in an April note.

Meanwhile, Japan—together with the International Olympic Committee (IOC)—agreed to postpone July’s Olympics after facing pressure from athletes and nations in the wake of the pandemic. Rescheduling the games to 2021 will ramp up costs, forcing Japan to go beyond the $10 billion already spent.

The prospect of extending employee contracts and renegotiating leases on venues could reportedly cost between $2 billion and $6 billion, at a time when Prime Minister Shinzo Abe is already under fire for his handling of Japan’s coronavirus response. The extra costs set up a possible confrontation with the IOC.

Last month, the Immigration Services Agency of Japan said the number of foreign tourists declined 94% from a year earlier, to 151,000. Japan set a target of 40 million visitors for the Tokyo Olympic and Paralympic Games originally scheduled this year, building on a record 28.4 million foreign visitors in 2019.