Tokyo 2020 Olympics could be shot in the arm for struggling Japan

Tokyo celebrates after winning 2020 Olympic bid 2:18

TOKYO, Japan - There were scenes of jubilation in Japan early Sunday after Tokyo was named host city of the 2020 Olympic Games – a shot in the arm for a country battered by decades of economic stagnation and the 2011 tsunami.

Athletes and officials gathered in Tokyo jumped up and down and hugged after the announcement, which came at 5.30 a.m local time Sunday (4.30 p.m. ET Saturday).

There was an outpouring of pride and joy at the International Olympic Committee announcement – but also surprise among many Japanese who had feared the country’s post-tsunami nuclear crisis had scuppered the city’s bid.

“I’m so happy!” said Toshiko Hasegawa, a freelance writer.

Citizens in Tokyo form a "Thank you" in the civic square after the city's successful bid to host the 2020 Olympic Games.

“Japan has been in an economic slump; I hoping this will jump start the economy,” she added. “Since the earthquake and the tsunami, tourism had dropped.”

Takamune Tani, an office worker, said “I was surprised. I thought maybe Japan wouldn't win.”

But despite reservations about the cripple Fukushima nuclear power plant in northeast Japan - and tough competition from rival cities Istanbul and Madrid- Tokyo emerged as the international favorite.

Among the strengths of Tokyo’s bid was its status as one of the world’s most sophisticated cities, its love of sports, and a willingness to invest billions of dollars in the 2020 event.

It also has previous experience, having hosted the summer games in 1964 and the winter games in Nagano in 1998.

“The Games of the 32nd Olympiad in 2020 are awarded to the city of … ,” IOC president Jacques Rogge said as he opened the envelope in Buenos Aires, Argentina. “Tokyo.”

Tokyo 2020 delegation members celebrate AFP PHOTO / JUAN MABROMATAJUAN MABROMATA/AFP/Getty Images

Turkey had never hosted the Olympics. Istanbul was trying for the fifth time. The other finalist, Madrid, was eliminated in the first round of voting.

"In most competitions, if you don't win a gold medal, you can also win maybe a bronze one," Tokyo Gov. Naoki Inose told reporters after the announcement. "In this battle, there was only the gold."

The decision suggests IOC members were convinced by Prime Minister Shinzo Abe's reassurances that radiation leaks from Fukushima pose no threat to Tokyo or the games.

Japan is counting on the games to boost both the economy and morale, the Associated Press reported. Two decades after its economic ascent was cut short by the bursting of its financial bubble, its population shrinking and rapidly aging, it can use all the help it can get, said Yukio Takahashi, who was jubilant as he took his morning walk with his wife in a suburban park that was a main 1964 Olympic venue.

Hey future Olympians, it's Tokyo in 2020 1:55

Hosting the 2020 games could yield positive economic effects of over $40.4 billion and create more than 150,000 jobs, according to some estimates, more than half of it new demand for construction, sales of Olympics-related goods and purchases of new televisions and other appliances.

NBC News' Alastair Jamieson and The Associated Press contributed to this report.