Japan dream of 40m tourists may fall short, could end up with 5m

TOKYO • Fewer than five million tourists could end up visiting Japan in 2020 as the government’s goal of welcoming 40 million visitors meets the reality of the coronavirus pandemic, according to SMBC Nikko Securities economist Koya Miyamae, who warns of a longer-term economic impact.

According to data from the Japan National Tourism Organisation on Wednesday, the number of visitors to Japan tanked last month to 1,700. That was a new low in records that go back to 1964, as the pandemic largely shut down the country’s borders. So far, only 3.9 million visitors have arrived in Japan this year.

“It’s really difficult to see when visitors will be back,” Miyamae said.

As restrictions are likely to be lifted only for business travellers and students, it could be a long time before the return of tourists, who make up 90% of Japan’s visitors and spend more money while they are here, he added.

The stark drop in income from tourists is likely to cast a long shadow on Japan’s economy, as the country loses one of the few clear success stories of Abenomics. Miyamae estimated the decline in tourist spending would directly shave around 1.6 percentage point off second-quarter growth, still only a fraction from the annualised 22.4% drop expected by analysts as the economy is battered by the virus.

Yet, the pandemic is likely to have longer-term implications for the tourism sector as businesses have to lower their expectations of visitor growth and account for social-distancing needs.

“It is unfortunate, but the sector itself will be forced to change. It is really unclear how much it can recover. Some restrictions may be eased, but it is better to assume there won’t be too much of a recovery,” he said. — Bloomberg