Comparison of the Impacts of Decreasing Inbound Demands by Foreign Visitors to Japan Due to the COVID-19 Pandemic^*

Abstract: The Japanese government enacted the Tourism Nation Promotion Basic Act in December 2006 to increase the number of foreign visitors to Japan, which reached 32 million in 2019, and inbound consumption reached 6 trillion yen in that year. However, the number of foreign visitors to Japan “evaporated” in 2020 because the entry of foreigners into Japan was restricted due to the coronavirus 2019 disease (COVID-19) pandemic. We used the “Survey on Consumption Trends of Foreign Visitors to Japan’’ and the “Statistics on the Number of Foreign Visitors to Japan by Nationality and Purpose’’ to estimate the expenditure of foreign visitors to Japan. We estimated the impact that the “evaporation” of the number of foreign tourists visiting Japan had on the Japanese economy at that time by the nationality of the foreign tourists. First, the highest economic effect by country/region was China (4.6 trillion yen), followed by Taiwan (1.3 trillion yen) and South Korea (1.1 trillion yen). Next, the impact on Japan’s GDP was approximately 5.8 trillion yen, which was equivalent to 1.0% of the nominal GDP in 2019. The “evaporation” of inbound consumption due to the COVID-19 pandemic was a big blow to the Japanese economy as the 1.0% decrease was equivalent to about one-third of the nominal gross domestic product’s negative growth rate of -3.2% from 2019 to 2020.

Key words: COVID-19, ripple effect, foreign visitors, tourism consumption

JEL codes: C1, C3, C4, C5