Foreign tourist spending in Japan has skyrocketed over the past decade, becoming the country's second-largest export category. This significant shift highlights a growing emphasis on services within the Japanese economy. Direct purchases by non-resident visitors soared to an annualised 7.2 trillion yen ($45.1 billion) in the first quarter of 2024. This surpasses the 4.6 trillion yen recorded in the final quarter of 2019. The number of foreign visitors to Japan has surpassed pre-pandemic levels, exceeding 3 million per month since March 2024. This growth is accompanied by a rise in per-capita spending, jumping 31 per cent between 2019 and 2023. This surge positions foreign tourist spending firmly ahead of established export categories like electronic components (including semiconductors) and steel, which ranked second and third respectively in 2023. Saisuke Sakai from Mizuho Research & Technologies explains that the slow growth in goods exports is due to factors such as the relocation of manufacturing facilities overseas in the 2010s and reduced competitiveness in sectors like semiconductors. The weak yen, averaging 140.58 to the dollar in 2023, is a major contributor to this trend, Sakai mentioned. Interestingly, spending patterns have shifted. Budget tours and duty-free shopping, popular in the 2010s, are seeing less favour. Travelers are now allocating more towards leisure activities, including accommodation, food, transport, and tours. The luxury travel segment holds promise, with high spenders (over one million yen) contributing 14 per cent of total spending in 2023 despite representing only one per cent of visitors. However, tourist concentration in major cities like Tokyo and Osaka poses a challenge. The government aims to encourage visitors to explore regional destinations. Attribution: The Nikkei Asia
