Japan sees spike in tourist arrivals, recovers to 78% of pre-pandemic levels

The number of foreign visitors to Japan topped 2 million for a second consecutive month in July, recovering to about 78% of pre-pandemic levels, according to Japan’s National Tourism Organization.

The number of visitors came to 2.3 million, compared with 2.99 million in July 2019, the organization reported on Wednesday. The strong reading raises the likelihood that spending by visitors, spurred by the weaker yen, will continue to support the nation’s economic recovery.

Net exports jumped in the quarter through June, driving the bigger-than-expected growth in the world’s third largest economy. Spending related to inbound tourism is a component of that tally. Outlays by visitors during the period recovered to 95.1% of the same period in 2019, before the pandemic.

With China ending its ban on tour groups to Japan this month, inbound spending is expected to remain a support factor for the economy in coming months. While the numbers of arrivals from countries including the US and Australia are already surpassing 2019 levels, visitors from China have lagged. In July, 313,300 Chinese entered Japan, down 70% compared with four years ago. Those arrival figures are expected to surge after the lifting of the ban.

Daiwa Institute of Research estimates that Chinese tour groups will boost inbound spending by about 200 billion yen to roughly 4.1 trillion yen ($28.2 billion) this year.

Prime Minister Fumio Kishida aims for inbound spending to reach an annual 5 trillion yen as soon as possible. That would exceed the record 4.8 trillion yen recorded four years ago.

The yen’s recent drop to a nine-month low against the dollar increases the spending power of foreign tourists.