Typhoon Could Weigh on Japan Growth by Denting Tourist Boom

(Bloomberg) -- Japan’s tourist boom has been one of country’s few unambiguous economic success stories.

Even as inflation and wage growth have stubbornly stayed below targets, tourist numbers have smashed them. A target of 20 million visitors by the 2020 Olympics was met with five years to spare, then swiftly doubled.

However, a series of natural disasters over the past two months is weighing on this trend.

Growth in inbound tourists showed an abrupt slowdown in July, according to latest figures, with the smallest year-on-year percentage increase since early 2013, when relations between Japan and China were at a nadir.

Japan’s tourist body blamed the recent figures on the impact of a large earthquake in Osaka in June and historic floods in western Japan in early July that killed more than 200 people. Now Typhoon Jebi threatens to weigh further on tourists mulling a visit. The storm has left Japan’s third most-used airport flooded and isolated, with no schedule in place for when operations can resume.

“Inbound tourist numbers won’t be able to avoid a drop in September,” said Koya Miyamae, senior economist at SMBC Nikko Securities. The typhoon’s biggest impact “will be on inbound tourists.”

A run of poor weather, including record-breaking heat and heavy rains, have already had some impact on tourism, Miyamae said. Typically July sees a record amount of visitors, but that didn’t happen this year due to the heavy rains.

The drop in last month’s tourist data caused so-called inbound-related stocks to slump, and Typhoon Jebi is further impacting the shares on Wednesday. Fancl Corp. whose cosmetics are favored by many Asian visitors, fell almost 11 percent, while fellow cosmetics maker Kose Corp., discount store operator Don Quijote Holdings and baby-products maker Pigeon Corp. also fell.

Natural disasters aren’t the only thing denting tourist growth -- changes to Japan’s “minpaku”, or home-sharing laws have made it harder for tourists to get Airbnb-style rooms.

For a government that has made tourism a centerpiece of economic policy, slower tourism growth is further unwelcome news. “There’s a chance that the number of inbound tourists will fall in the third quarter, which would weigh on third-quarter GDP,” Miyamae says.

Visitor figures for August will be released on September 19.

To contact the reporters on this story: Gearoid Reidy in Tokyo at greidy1@bloomberg.net;Connor Cislo in Tokyo at ccislo@bloomberg.net

To contact the editors responsible for this story: Kazunori Takada at ktakada17@bloomberg.net, Gearoid Reidy

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