Japan’s tourism industry is booming, and it’s one of the most successful parts of Prime Minister Shinzo Abe’s growth strategy, according to researchers at investment bank Societe Generale.
Visitors to the country more than doubled between 2011 and 2014 (Abe became Prime Minister again at the end of 2012).
Abe’s “Abenomics” policy has been made up of the Bank of Japan’s massive quantitative easing scheme, along with easier fiscal policy. The policy has weakened the Japanese yen (an expected near-term outcome of the package), which in turn has made it cheaper for tourists.
Most visitors are coming from Asia, and there’s been a very noticeable spike in the last couple of years. Here’s a breakdown (click to zoom in):
The authors say an uptick in foreign visitors is “due largely to yen depreciation.” The US dollar has risen 47% in value against Japan’s currency since December 2012, which is buoying tourism numbers and spending.
Many tourists are coming from China, according to the South China morning post, and while these visitors may not be spending in dollars, the Chinese yuan is pegged fairly close to the dollar, meaning they have seen their potential Japanese spending power surge, too.
The boom in Chinese visitors to Japan has no doubt been strengthened by the growing number of middle-class Chinese households, compared to several decades, that now have the money to travel.
It’s not just visitor numbers that have ballooned. Total spending by foreigners is growing at even faster pace. It’s up by very nearly 150% from 2011 to 2014:
This isn’t likely to be the end of it either. Societe Generale expects that Japan’s potential growth rate will rise significantly, from about 0.5% now to 1.5% by 2020 — of which they expect tourism to contribute 0.15 percentage points, a big jump for a small sector.
In 2019, Japan is hosting the Rugby World Cup, and Tokyo is hosting the Olympics the year after, so there will be huge opportunities for the country yet to come.