Japan’s economy gets boost from 25 million visitors in 2023
By Mia Glass and Yoshiaki Nohara
(Bloomberg) — Japan welcomed 25 million tourists in 2023, the largest number since 2019, as a weak yen helped attract post-pandemic visitors in a boost to the nation’s fragile economy.
The number of inbound tourists last year compared with 3.8 million in 2022, Japan’s National Tourism Organization reported Wednesday. December also marked the seventh consecutive month in which the number of foreign visitors exceeded 2 million, for the highest figure in that month on record.
The return of large numbers of visitors to Japan is a positive development for an economy that shrank at the sharpest pace since the height of the pandemic in the summer. Weakness in the currency has helped boost tourists’ spending power, making Japan a much more affordable destination. The yen averaged around 140.5 against the dollar last year.
Spending by visitors totaled a record ¥5.3 trillion ($35.9 billion) in 2023, up by roughly 10% compared with the tally in 2019, before the pandemic, while spending per person increased by almost 34% to ¥212,000, according to the Japan Tourism Agency. Outlays by visitors came to ¥1.7 trillion in the final quarter of 2023, a 21% increase from the third quarter, a positive result for the economy as domestic demand wilts due to high prices.
“GDP will swing back to a positive reading in the fourth quarter with help from strong inbound tourism. I don’t see any factors that could slow down the tourism recovery,” said Mari Iwashita, chief market economist at Daiwa Securities Co. “But I’m not sure if domestic spending will recover into positive readings because there are some lingering effects of inflation on domestic consumers.”
Still, the annual number of visitors remains below the 32 million figure recorded in 2019. Inbound tourists from China, the largest group before the pandemic and the biggest spenders, also lag behind pre-Covid numbers at 2.4 million people compared with 9.6 million visitors in 2019, despite the end of Beijing’s ban on tour groups to Japan.
China has been struggling with its own gloomy economic data, while tensions also remain over Japan’s release of wastewater from its Fukushima nuclear reactor, a factor that has put people off visiting.
The largest number of visitors came from South Korea and Taiwan in 2023, with 7 million and 4 million, respectively. Singapore and the US were also among the nations with more tourists visiting Japan than before the pandemic.
The Japanese government has set an ambitious goal for 2030 of 60 million visitors, and a target of ¥15 trillion for their spending, according to the Ministry of Economy, Trade, and Industry.
It remains to be seen how Japan’s New Year’s Day earthquake will affect tourism, especially in the popular destination of Kanazawa known for its picturesque historical districts and a castle that had to temporarily close after the quake.
Larger numbers of tourists help bring money into the economy and fuel spending in Japan’s most visited regions, helping to prop up the nation’s sputtering recovery. A return to growth in the last quarter of last year may make it easier for the Bank of Japan to finally raise interest rates for the first time since 2007 in the coming months.
The central bank meets next week and is widely expected to keep its negative rate on hold for now.
©2024 Bloomberg L.P.
