The number of Japanese heading overseas this summer is expected to drop sharply as the yen has plunged to its lowest level in 40 years, according to a forecast.
Major Japanese travel agency JTB announced that 2.17 million Japanese plan to travel abroad from the 15th of this month through the end of next month, down 8.8% from the same period last year, Kyodo News reported Monday. It marks the first decline in the number of overseas travelers since 2023, when the COVID-19 pandemic subsided.
The cause is attributed to a sharp rise in overseas travel costs as the yen fell to around 162 per dollar, its lowest level in 39 and a half years since December 1986, just after the Plaza Accord.
Japanese Finance Minister Satsuki Katayama and Chief Cabinet Secretary Minoru Kihara made verbal interventions in succession, but failed to reverse the weakness. The Japanese government injected 11.73 trillion yen to intervene in the market from late April through the end of last month, yet was found to have failed to halt the yen's decline.
The Bank of Japan raised its policy rate to 1% on the 16th of last month, the highest level since 1995, but analysts say it was insufficient to narrow the interest rate gap with the United States.
As a result, travel cost burdens have grown. According to JTB's tally, the average overseas travel expense per person is expected to reach 323,000 yen (about 3.1 million won), up 6.3% from the previous year. Airlines including Japan Airlines (JAL) and All Nippon Airways (ANA) also raised fuel surcharges amid instability in the Middle East, contributing to the cost increase.
Nevertheless, Korea maintained its position as the top preferred summer vacation destination for Japanese travelers at 26.2%. Taiwan followed at 16.2%, with both destinations sharing the common trait of being neighboring countries with relatively cheap airfares. By contrast, only 10.4% of Japanese chose China, where a chill has persisted since early this year, falling to about half the level of previous years.
Some had expected that Japanese with thinner wallets due to the weak yen would turn to domestic travel instead of going abroad, but that appears not to be the case. As recent price increases have continued, more people are seeking to cut back on travel altogether. JTB forecast that domestic travelers this summer will number 69 million, down 4.4% from the previous year.
Conversely, foreign tourists are the ones benefiting from the weak yen. As the yen's weakness persists, the number of overseas visitors to Japan is instead setting record highs. Major tourist destinations in Japan, including Kyoto, are busy preparing measures against "overtourism" caused by tourist overcrowding.
