Japan pins hope on V-shaped recovery in inbound travel

Jiji Press

11:00 JST, January 5, 2023

TOKYO (Jiji Press) — Demand for travel to Japan, which had plummeted amid the novel coronavirus crisis, has started to recover since the country drastically eased its COVID-19 border controls last autumn, and attention is being paid this year to whether it will rise back to levels before the pandemic.

While the yen’s depreciation is a positive factor, the attainment of a V-shaped recovery depends on the situation in mainland China after Beijing’s zero tolerance approach to COVID-19 dragged down Chinese people’s trips to Japan.

The number of foreign visitors to Japan totaled about 930,000 in November 2022, nearly 40% of the level in November 2019, before the pandemic, according to the Japan National Tourism Organization.

Japan lifted most of its COVID-19 border measures last October, allowing the resumption of individual and visa-free travel to the country. It was “a turning point toward the revival of tourism,” Japan Tourism Agency Commissioner Koichi Wada said.

Major sources of visitors to Japan are South Korea, Taiwan, Hong Kong, the United States and Southeast Asian countries. Pent-up travel demand from the pandemic is also expected.

However, the number of visitors from mainland China, which accounted for 30% of the total before the pandemic, stood at only 21,000 in November, about 2.8% of the November 2019 level. The Chinese government has begun to relax its zero-COVID policy, but there is strong uncertainty over whether Chinese tourists will come back to Japan.

The easing led to new COVID-19 cases in China skyrocketing, prompting the alarmed Japanese government to start to test all visitors from mainland China for the coronavirus upon arrival as an emergency measure late last month.

The number of visitors from China will “only recover moderately for the time being,” an official at Daiwa Institute of Research Ltd. said. Many others believe the same.

SMBC Nikko Securities Inc. forecasts that the total number of visitors to Japan will be around 22.5 million this year, about 70% of the record high of 31.88 million in 2019.

The total value of consumption by foreign visitors is estimated at about ¥4 trillion, about 80% of the record ¥4.8 trillion in 2019. Spending by visitors from abroad is therefore expected to provide a certain level of support for the Japanese economy.

According to the Japan Department Stores Association, tax-free sales in November last year totaled approximately ¥17.54 billion across Japan, already recovering to nearly 70% of the level of the same month in 2019.