Visitors took photos of early blooming cherry trees in front of a convenience store in Tokyo. Early blooming cherry blossoms in Tokyo, especially varieties such as Kawazu-Zakura, usually bloom from late February to early March, before the more common Someni Yoshino Cherry flowers that peak from late March to early April. The phenomenon is associated with mild winters and specific varieties, providing a vibrant pink sight against Tokyo’s urban backdrop before the start of the main cherry blossom season.
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In recent years, foreign tourists have had a disproportionate impact on Japan’s economic growth. However, as the yen grows, their impact may begin to weaken, analysts say.
Visitors have always been the main driver of Japan’s economic revival. The weaknesses in the yen attract many people, which makes shopping, entertainment, transportation and overnight cheaper.
What happens if the tide turns and strengthens the tide?
Travel spending in Japan has soared in recent years. Indeed, inbound tourism contributed half of it According to Mastercard School of Economics, Japan’s annual GDP growth rate was 1.5%, and last year, 0.4 percentage points of Japan’s annual GDP growth of 0.1%.
It marks a huge change in the composition of the world’s fourth largest economy. From 2010 to 2019, the tourism industry contributed an average of 0.1 percentage point in GDP, while Japan’s GDP growth rate averaged 1.2%.
Mei’s report shows that the weaker yen makes Japan a more attractive shopping destination. This is in stark contrast to the rest of the world, and tourists prefer to spend money on experiences, such as going to restaurants, concerts or bars.
Japan has been one of the most popular travel destinations in Asia recently. So much so that Japan’s tourism organization says the country sees Record 36.9 million tourists arrive The entire year of 2024.
Not only that Record high of 8.1 trillion yen ($54.06 billion), a 53.4% increase compared to a year ago.
Overseas travelers’ average spending in Japan increased by 6.8% to 227,000 yen. However, some of the Clemente conditions that make this higher interest in tourism may be reversed.
High domestic inflation has prompted Japanese banks to raise interest rates compared to other major central banks that are lowering interest rates. In turn, this triggers JPY On March 11, the five-month high against the dollar against the dollar.
Japan’s booming tourism industry
Yujiro Goto, head of Japan’s FX strategy at Nomura, told CNBC that weaker inbound tourism will be negative for Japan’s GDP growth.
This is because the weakness of the yen has always been one of the key reasons for accelerating inbound tourism. Then, substantial appreciation of the currency is expected to reverse this trend.
The last time the yen traded with Greenback was 148.26, about 7.2% from its 2025 high of 158.87.
Gotto said the yen has been at historic lows, “like from 161 to 146, the price against the dollar may not change the trend.”
Min Joo Kang, a senior economist at the Dutch Bank of Japan and South Korea, shared this view, but also pointed out that given that the number of Chinese tourists has not yet returned to its previous level.
“The measures announced over the weekend also include supporting higher wage growth and stimulating the Chinese asset market. This could lead to an increase in China’s outbound tourism industry,” she added.
Beijing launches on Sunday A plan, boosting consumption, calls for measures to increase wages, and “multiple measures” to stabilize the stock market.
Weaker tourism growth does not necessarily mean that Japan’s GDP expansion will fall off the cliff. May’s Mann said the contribution of domestic consumption in Japan is expected to improve given the strong labor market and wage growth.
This photo was taken on February 20, 2025 and shows a 634m high (2,080 feet) Tokyo Skytree (L), a train line from the Osiag region, the capital of Japan.
Kazuhiro Nogi | AFP | Getty Images
Japan’s largest union announced last Friday that it managed to get average Salary increase by 5.46% It has grown the most in 34 years since April.
“So the tourism industry may be lighter, but then domestic consumption may become the driving force for growth,” Mann said.
If you appreciate the yen, Ing’s Kang said it would have a more positive impact on the domestic economy, thereby promoting private consumption and services.
Tourism Management
Goto also said that the gradual strength of the yen can slow down cost inflation and improve the actual wages of domestic residents. This will help shift GDP from foreign expenditures to domestic expenditures.
More importantly, Goto said that while Kutoism has become a major problem in areas like Kyoto, foreign demand clearly supports a positive feedback loop of wages and inflation.
He also noted: “Regional governments may consider higher taxes on foreign tourists (hotels, airports, etc.) which can support Japan’s financial situation while managing tourism flows.”
Mann said the tourism industry has contributed much more than anyone in the past two years, “until Japan relaxes further, it will remain an important contribution to the Japanese economy and is slightly stronger by domestic consumer spending.”
“The yen weakness may start to reverse at least this year, but it will be a long-term process rather than turning around in just one or two months,” Mann added.
