A recent growth area that stands out is the expansion of inbound demand (consumption by foreigners visiting Japan).
When I walk around some places in Tokyo on the weekend, I see so many foreign tourists that I don’t know which country I’m in. These include Ginza, Aoyama/Omotesando, Shibuya, Shinjuku, Ikebukuro, and Asakusa.

It is not unusual for foreigners to account for more than half of the passersby. There is no doubt that their economic impact will be enormous.
Looking at macro data, the consumption amount by foreign visitors to Japan in 2023 is 5.3 trillion yen, surpassing the pre-coronavirus 2019 figure (4.8 trillion yen). The number of people is 25.06 million, lower than the peak in 2019 (31.88 million). In other words, the consumption pie expanded as the average spend per customer increased by 1.3 times (133.8%).
Over the three years of the coronavirus, prices and wages overseas have risen, and thanks in part to the weaker yen, foreigners have become considerably richer. Looking at the dollar-yen exchange rate, compared to the average of 109 yen/dollar in 2019 and 140 yen/dollar in 2023, Americans’ purchasing power against the yen has increased by 1.29 times.
The impact of this is most noticeable on hotel costs. In terms of consumer prices, hotel costs in Tokyo and Osaka rose 1.4 to 1.6 times from the previous year in the October-December period. Based on actual experience, some people said it was 2-3 times higher.
In areas where there is a large number of inbound tourists, prices have been raised to appeal to richer inbound tourists, creating what is known as “inbound prices.” Naturally, this is a price that ordinary Japanese people cannot afford.

In addition to lodging, there are three services that account for a high proportion of visitors to Japan: transportation, food, and entertainment.
These fields will benefit from further expansion in the future.
The average growth rate from 2016 to 2019 before the coronavirus was 8.6% per year. Considering the current weak yen and price differences, we expect growth to be at a pace of 10% over the next few years.

It is likely that the current 5.3 trillion yen will double to 10.6 trillion yen around 2029, five years from now.
So, what is necessary for the Japanese economy to benefit even more from the inbound economy?
My prediction is that in the future, inbound demand will be dispersed from the two unevenly distributed locations of Tokyo and Osaka to other locations. According to calculations, approximately 60% of consumption by visitors to Japan is concentrated in these two areas (27% of nominal GDP).
By prefecture, the ratio of inbound consumption/nominal GDP in Tokyo and Osaka is relatively high at 1.6% and 2.1%, respectively, but in Kyoto (3.5%), The rate is even higher in Okinawa Prefecture (2.9%). These two locations can be said to be areas that have been successful in capturing inbound demand.

Other prefectures that rank highly are Fukuoka, Yamanashi, Hokkaido, Chiba, Oita, Nara, and Ishikawa.
Even in areas not mentioned here, it is thought that by successfully developing local tourism resources, it will be possible to absorb a large amount of inbound demand that will continue to grow in the future.