TOKYO: Japan's gross domestic product is expected to be cut by some 1.4 percent if this summer's Tokyo Olympics and Paralympics are canceled due to the coronavirus outbreak, a securities house said Friday.

Such a scenario is projected to cause some 7.8 trillion yen in economic losses, SMBC Nikko Securities Inc. said.

The possible losses include 670 billion yen in damages related to the Tokyo Games, such as operational costs for the events as well as expenditures by spectators, SMBC Nikko said.

The losses also include declines in domestic consumption and in imports and exports from and to China, a major source of supplies for Japan, it said.

SMBC Nikko sees a high possibility that the Tokyo Games will be canceled if the global spread of the virus continues until July.

If negative impacts from the virus are prolonged, publicly traded Japanese companies are expected to see a net profit declined of up to nearly 25 percent, SMBC Nikko said.

It said that a possible credit crunch could trigger an economic slump comparable with the one during the global financial crisis of 2008.

"To prepare for the worst, the government needs to make available support measures such as debt guarantees for small firms," SMBC Nikko chief economist Junichi Makino said.

JIJI Press