When frolicking around Shinjuku or hunting for the best bargains in Aoyama, a visitor would hardly notice that Japan has been in recession for the past few decades. Dig deeper – maybe, listen to the whines of Japanese friends here and there – and it will be difficult to not notice how the Japanese are spending less and less each year.
If you are to visit a country, it is stupid to think that the health of its economy is not anything you should care about. The strength of its currency, when pitted against your home country’s, dictate how much pocket money you’re getting, after all.
One of the tenets of the often-praised Abenomics is the devaluation of the Japanese yen to encourage exports and thwart consumption of imported goods by flooding the banking system with cash – balance sheet-wise that is. More money in circulation almost always translates to lower currency value. Ironically, the Japanese are choosing to invest in luxury items, which they deem resilient to sudden value depreciation.
As it tries to tame the world and bring it to its doorstep, Japan wields its intricately crafted form of soft power. To begin with, the country’s export economy has already been attracting the attention of neighbouring countries. Japanese products, technology, and media reach distant shores. Their popularity – maybe owing to their superior quality, product design ingenuity, and (to some extent) unparalleled cuteness – has been fueling interest in the island nation.
Now, retail is propelled forward with the influx of foreign tourists. Lower exchange rates for the yen (higher exchange rates versus the yen), plus near zero inflation, has made shopping in Japan cheaper than shopping in its neighbouring countries, boosting tourism even further. Chinese and Korean tourists are hoarding goods – especially luxury and designer items – in Ginza and Roppongi. Visitors leave with their overweight luggage, but are the economic benefits of a boost in tourism outweighing the negative effects of a potentially unsustainable artificially weakened currency?
The government can only push its currency down to some extent, though. There’s the actual value of the currency to contend with. For quite some time now, the yen has been in an upward climb, resisting the Bank of Japan’s efforts to keep it down.
The Japanese are culturally risk-avoidant, shying away from actions with unpredictable outcomes, but its calculated risk-taking may be directed in the wrong direction. It has to invest more on bettering industry and its people if it were to come rushing out of the quicksand. If Japan is to triumph against this decades’ worth of economic slump, it would have to stop focusing on monetary policy-making, and start with the structural changes Shinzo Abe has been puttering about. Hopefully, the reinvigoration of the countries’ industries will lead towards a radiant future everyone – be they visitor or local – will benefit from.
We are looking forward to how these structural changes will be relevant for future tourists and visitors.