Japan’s 10-day break to fete new emperor may breathe life into economy
24 April, 2019, 9:04 am
TOKYO (Reuters) – Japan’s unprecedented 10-day holiday to celebrate Crown Prince Naruhito’s enthronement is expected to give the sluggish economy at least a short-term boost.
Breweries, hotels, retailers, restaurants and train operators are all expected to benefit from the holiday, which runs from April 27 to May 6. Banks, schools, government offices and many businesses will be closed.
A record 24.7 million people – about one-fifth the country’s population – are expected to travel, according to travel agency JTB Corp., mostly within the country.
“Japanese are in a festive mood, with the new imperial era beginning and the 10-day break,” said Yoshiie Horii, a spokesman for brewer Asahi Group, which is increasing production of several brands by 5-10 percent ahead of the break. “We think this holiday will spur consumer spending.”
Japan has a cluster of national holidays every year around this time dubbed “Golden Week.” But this year, authorities gave the nation an extended vacation to fete the imperial succession.
After a 31-year reign, Emperor Akihito will abdicate on April 30 and be replaced by his son Naruhito the next day.
Japanese have made travel plans months ahead of time, creating intense competition for popular destinations such as Hawaii and Europe. Akiko Nishikata’s family tried in November to reserve a package tour to Hawaii for Golden Week but were told they were sold out.
“This is a once-in-a-lifetime chance to go on a long trip, so we’re disappointed,” Nishikata said. Instead, they’ll travel to either Hokkaido in the north or Kyushu in the south.
Also, because the imperial transition is triggered by Akihito’s abdication, not his death, consumers don’t feel a need to hold back due to mourning.
To mark the new era, department stores in Tokyo plan to offer limited quantities of commemorative items on May 1, including traditional sweets with “Hello, Reiwa” on them and confections sprinkled with powdered gold.
The expected economic bump from the long holiday will boost second-quarter GDP growth and give Prime Minister Shinzo Abe’s government another reason to proceed with a planned sales tax increase in October, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
Kumano estimates that domestic travel spending will jump nearly 30 percent from a year ago to 1.48 trillion yen ($13.3 billion).
“In March, there was a lot of talk about a recession, but that’s completely disappeared with buzz from the announcement of Reiwa on April 1,” he said. “May 1 will be even bigger.”
Overall consumer spending during the 10 days is forecast to rise 7.6 percent compared with a year ago and contribute a quarter percentage point to GDP, said Koya Miyamae, senior economist at SMBC Nikko Securities.
But other analysts cautioned that an increase would probably be followed by a drop in consumption, making the long-term impact negligible.
“A spending boost, if any, will be short-lived,” said Masaki Kuwahara, senior economist at Nomura Securities.
Manufacturers generally don’t expect the longer holiday to have a big impact. Toyota, for example, says its plants are usually closed for nine days during Golden Week, and it is doing the same this year.
Computer systems companies and other businesses may see a dip in sales because of lost workdays, but a Reuters survey of about 220 companies showed that nearly half didn’t expect the long break to affect their business. About 28 percent predicted a decline in output or sales while a quarter projected a rise.
Hospitals will alternate operating hours during the break, as is typical during holidays. Tokyo residents can visit a website to see which hospitals are taking patients, and find more detailed information.
Financial market traders, meanwhile, are worried that the 10-day shutdown could cause disruptions and unsettle the yen.
The U.S. jobs report and several other key events will happen while the market is closed, said Shogo Maekawa, global market strategist at JPMorgan Asset Management.
“It’s a risk that we can’t trade for 10 days even if something volatile happens in overseas markets,” he said.