By Leika Kihara
TOKYO (Reuters) - The 2020 Tokyo Olympic Games will likely boost Japan's economy by 0.2-0.3 of a percentage point on average each year until 2018, offsetting some of the pain from another sales tax hike planned in 2017, the Bank of Japan said on Monday.
The estimate by the central bank, made on request by premier Shinzo Abe's administration, underscores the government's hope that the Olympics will draw fresh investment and more overseas tourists to jump-start a stagnant economy.
Investment on new hotels, venues and infrastructure related to the games will reach a cumulative 10 trillion yen ($83 billion) by 2020, the BOJ said in a report assessing the economic impact of the event.
Such investment and spending by overseas visitors will boost Japan's gross domestic product (GDP) by up to 30 trillion yen during 2015 to 2020 - or roughly 6 percent the size of the economy, the central bank said.
With construction investment set to peak around 2020, however, the BOJ urged the government to proceed with reforms to moderate any speed bumps created by the event.
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"To sustain the stimulus effect of the Olympics after it's over, there's a need to take steps to strengthen Japan's growth potential and dig up new demand that can substitute for (the drop in) construction investment," the BOJ said.
($1 = 120.4000 yen)
(Editing by Edmund Klamann and Sam Holmes)