Half of Japan's recent economic growth has come from tourism
The competition for tourists is set to intensify.
Japan is well-known as a manufacturing and innovation powerhouse, but what is rather surprising is that since the pandemic lockdowns, half of Japan's annual GDP growth has been driven by in-bound tourism.
What's more - a study done by Mastercard shows that in-bound tourism in particular has a powerful multiplier effect on the performance of the rest of the economy.
Our study based on the OECD’s global input-output table also highlights a substantial, 1.8x multiplier effect of inbound tourism on Japan's economy. This means that every ¥100 spent by foreign visitors in Japan spurs an additional ¥80 in economic activity. This occurs because the tourism sector purchases goods and services from upstream suppliers to meet the needs of tourists, triggering a ripple effect of additional spending and economic benefits. To break this down further, our model shows that when a foreign visitor spends ¥100 in Japan, tourism industries (including retail, accommodation, food services, transport and entertainment) purchase ¥4.3 in food and beverages, ¥3 in utilities, ¥2.9 in administrative services, ¥2.8 in real estate rental services and ¥2 in financial services, totaling an additional ¥80. Of this ¥80, ¥60 is spent on domestic goods and services, while ¥20 is directed toward overseas goods and services.
With now so many barriers to the free trade of physical goods in the global economy, you can expect that the competition for the international tourist trade is going to intensify in the period ahead.
A destination like Japan is a highly-compelling one and even if you are travelling on the South African Rand it's still surprisingly affordable.
Convincing tourists to head to the southern tip of Africa instead needs to be one of our top priorities.
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