Foreign Tourism in Japan: The Supply-Side Potential

Foreign Tourism in Japan: The Supply-Side Potential
CATEGORIES: Viewpoints

Foreign Tourism in Japan: The Supply‑Side Potential

Japan used to be expensive to visit. Not anymore.

The weak yen has made Japan’s famously high prices more reasonable, prompting a boom in foreign tourists drawn by the nation’s safety, cleanliness, cuisine and historical sights. In April – prime cherry blossom viewing time – the number of overseas visitors to Japan jumped 43% from a year earlier to a single-month record of 1.76 million. April also marked a record high “tourism surplus” in Japan’s current account.

Economists generally regard inbound tourism as a demand-side stimulus. But growth in foreign tourism also has the potential to boost the supply side of Japan’s economy, which has been stunted by years of deflation and anemic growth.

Indeed, signs of adaptation are already evident. In central Tokyo, a major hotel has been renovating its top floors with more spacious rooms. A leading car maker has unveiled a new van taxi to accommodate luggage-laden foreigners. Restaurants and other service providers need to differentiate themselves, leading workers naturally to upgrade their skills by learning foreign languages.

More importantly, over the long term the growing presence of visitors from abroad may lay a stronger foundation for increased immigration – a necessity amid the decline of Japan’s population. Growth in overseas tourism will create more opportunities for Japanese citizens to interact with foreigners and bridge differences in language, culture and historical understanding.

Amid the sharp depreciation of the Japanese currency, there has been criticism that only export industries will benefit. But the weaker yen, and the increased buying power it conveys to visitors from strong-currency countries, also has spurred inbound tourism and contributed to Japan’s growth strategy.

A version of this article appeared in Japanese in the Nikkei on 24 June 2015.


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