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Economy Tourism Japan's second-largest 'export' category behind cars

thomas

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Over the last decade, the expenditure of foreign visitors in Japan has seen a remarkable fivefold increase, solidifying its position as the country's second-largest export sector and highlighting a transition from goods to services. According to government data, in the first quarter of 2024, nonresident households' direct purchases in Japan's domestic market reached an annualized 7.2 trillion JPY (USD 45.1 billion). This figure peaked at 4.6 trillion JPY in the quarter ending December 2019, then experienced a decline due to the COVID-19 pandemic. Still, it surged past this level in the April-June quarter of 2023 and has been on an upward trajectory ever since.

Tourism from overseas is becoming a pivotal component of Japan's economy, with the 7.2 trillion JPY figure surpassing the revenues from electronic components and steel, the country's second and third-largest exports in 2023, and exhibiting a growth rate that outpaces these sectors. Specifically, quarterly spending by tourists increased by just over 60% in the five years leading up to March 2024, while the annual exports of automobiles and steel each grew by approximately 45% from 2019 to 2023, and electronic components saw a growth of less than 40% during the same timeframe.


Meanwhile, the number of foreign travellers to Japan has surpassed its pre-COVID highs. Government data shows that the monthly total broke 3 million for the first time in March and has been above that for three months. Their spending has also risen more from pre-pandemic levels than in other major economies. Inbound expenditures grew 38.8% in Japan between October-December 2019 and the same quarter of 2023, according to the Japanese government's annual white paper on tourism. This compares with gains of 30.7% and 16.5% in Spain and Italy, respectively, and declines of 4.3% in the U.S. and 1.6% in Singapore. Per-visitor spending in Japan jumped 31% between 2019 and 2023.


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