The current market situation and exit of COVID-19 (2)
Social situation
Pandemic in Japan apparently slow down in last one month on daily confirmed cases, the number of still active cases and death. Observing this situation, Japanese government lifted its state of emergency for 39 out of the 47 prefectures on 14thof May and additional 3 prefectures are announced this morning (Osaka, Kobe and Kyoto prefecture) , although Tokyo and surrounded dense economic centers (Chiba, Saitama, Kanagawa prefecture) and Hokkaido still remain under restrictions. Government announced state emergency until the end of May on 7 of April on whole Japan, but it might be lifted before that after listening the opinion by advisory board of medical and economic experts.
Next reviewing meeting will be on 25thof May.
As the result, pandemic in Japan is much smaller than some other countries in Europe and USA. There are many discussions on the reasons because Japanese state emergency was not strict lock down with penalty based on the law, but strong recommendations or requests without penalty. One explanation could be Social Norm, people are watching the social situation and follow the rule even it’s not mandatory. Or it’s related with Japanese lifestyle. We don’t hesitate to have masks even we are not sick, we take off shoes in home and hygiene education is well managed in schools.
On the other hand, the nation’s economy sank into recession and analysis expect record 21.5% GDP contraction in current quarter. Already over 150 companies went bankruptcy related with COVIC-19, but the worst is yet to come. The government administration is criticized for the speed of services and far behind IT solution from other countries. Even government prepared huge stimulus package, many companies are suffering from cash flow.
Tourism and travel industry
Japan National Tourism Organization (JNTO) issued press release stating the situation in April both on outbound and inbound tourism.
- Inbound tourism to Japan
The visitor arrivals to Japan was 2,900, which is 99.9% decrease from 2.92 million last year. Especially tourists from China was only 200.
- Outbound tourism from Japan
Also outbound tourism was catastrophic situation. The number of departure was only 3,900, 99.8% decrease from last year, 1.66 million.
According to data by OAG, the number of international flights from main 6 airports in Japan was decreased to 2665 flights, which is 87.6% minus. In terms of number of seats, they were 596,511, 87.9% decrease.
I need to say that the situation in May could be almost same as in April.
On the other hand, we are encouraged by the news that Lufthansa group will resume the flight to Zurich and Frankfurt in June and Finnair will re-start flights from three airports (Tokyo, Nagoya and Osaka) in July.
Between optimism and pessimism
Japanese government will strongly support tourism industry by promoting domestic tourism and their stimulus package is named “Go to campaign”. Budget proposal for “Go to campaign” worth 15 billion EUR was approved by parliament last week. In this campaign, domestic travelers will get 50% subsidy out of whole travel expenses up to 20,000 JPY (Approximately 170 EUR).
Also there is subsidy for cancelation fee of school excursion to parents.
I attended two online seminars about post corona tourism yesterday, both of them were telling about mainly inbound tourism to Japan. There was very interesting sharp contrast on future prediction between two seminars. One was interview with Japanese analyst living in Japan and other was with Japanese professor living in USA. Both of them admitted that nobody knows the future at the moment in this situation. But Japanese analyst was quite pessimistic point of view (Inbound tourism won’t come back so fast, so promotion for domestic travelers should be the priority) and professor in USA was bright future oriented ( It will come back from innovators and early adopters: Generation X and Millennials, so we need to prepared) According to Mckinsey and Company, Japanese are the most pessimistic for country’s recovery after COVID-19.
My prediction for recovery of outbound tourism from Japan is optimistic side. But the consumer behavior would be quite different from pre-corona virus period. Anyway, we need to prepare the activities for optimistic scenario for rocket start upon recovery.