As the COVID-19 pandemic continues to severely affect countries across the world, Japan has found itself in a very bad situation that has made politicians consider what to do to aid the economy.
In May, it was reported that Japan’s economy had fallen into recession.. Japan’s economy was already facing issues before the pandemic, mostly due to the government’s decision to increase the sales tax from 8% to 10%.
Despite the multiple measures the government took so the consumption tax increase would not have the same terrible effects the country faced in 2014 when it raised the sales tax from 5% to 8%, the economy still took a massive hit because of the government’s decision. To make things worse, Japan’s economy had also struggled in 2019 because of tensions with South Korea and two strong typhoons that severely affected areas including Osaka, Kyoto, and Tokyo.
With the many problems Japan was facing, it was no wonder that the COVID-19 pandemic made it the largest economy to enter recession; and prognostics are not positive. Bloomberg forecasts that the Japanese GDP could contract more than 20% in 2020 because of the virus. After all, some of the most devastating effects to the Japanese economy include the plummeting number of exports, the postponement of the Tokyo Olympics, and the complete vanishment of tourism.
Since we have touched tourism…
In 2019, it seemed that every media company (including Japan Info) kept reporting on the record numbers of foreign tourists visiting Japan, as well as their pros and cons. However, the COVID-19 virus has brought tourism to complete halt, April seeing a 99.9% drop. This is not entirely surprising since Japan implemented a travel ban early on that now includes over 100 countries.
With salaries stagnating and consumer spending decreasing due to Abe’s decision to increase the sales tax, Japan has relied on the money foreign tourists inject into the economy; and while there is debate about whether relying on tourisms as opposed to strengthening domestic consumption is a colossal mistake, it is clear that the current administration wants to do everything it can to bolster tourism.
The Japan Times has now reported that the government has come up with a plan to once again attract foreing tourists. This plan consists in covering half of the foreign tourists’ expenses, and would require ¥1.35 trillion ($12.5 billion).
If this plan comes into effect, it would of course present a wonderful opportunity for foreing visitors. However, the government will first see if the situation concerning COVID-19 gets better. If it does, then the program could start as early as July.
Would you consider taking advantage of this program?