A record number of tourists are spending more than ever in Japan. That may be good news for certain sectors, such as department stores, but still represents a small slice of the overall economy, say analysts.
In 2014, a record 13.4 million foreign tourists visited Japan, spending a combined 2 trillion yen ($16.9 billion), a 43 percent surge on the 2013 figures, according to government estimates. The government itself is bullish that it is on track to reach its target of attracting more than 20 million by 2020, when the Tokyo Olympics will be held, according to a Japan Tourism Agency official.
"The number of tourists look set to double to over 20 million by the time the Tokyo Olympics will be held – the weaker yen is having a big effect," said Eiji Kinouchi, Daiwa Securities' chief technical strategist.
Japan's tourism industry still has room to grow – it generated 5.0 percent of Japan's gross domestic product (GDP) in 2012, compared to nearly 10 percent in the European Union, North America and Southeast Asia, he said, citing figures based on government data.
Still, spending by foreign tourists generated just 0.5 percent of GDP in 2014, according to Nomura economist Minoru Nogimori. With numbers expected to double, however, "we think increased spending by foreign visitors, via services exports (travel receipts), will become an important factor supporting the Japanese economy," he said.