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 Saturday 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.
Photo: EPA-EFE / JIJI PRESS
“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. “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 is to abdicate on Tuesday next week and be replaced by Naruhito the next day.
Because the imperial transition is triggered by Akihito’s abdication, not his death, consumers do not 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 Wednesday next week, including traditional sweets with “Hello, Reiwa” on them and confections sprinkled with powdered gold.
The expected economic bump from the long holiday should boost second-quarter GDP growth and give Japanese Prime Minister Shinzo Abe’s government another reason to proceed with a planned sales tax increase in October, Dai-ichi Life Research Institute chief economist Hideo Kumano said.
Kumano estimated that domestic travel spending would jump nearly 30 percent from a year ago to ￥1.48 trillion (US$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, SMBC Nikko Securities senior economist Koya Miyamae said.
However, 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,” Nomura Securities senior economist Masaki Kuwahara said.
Manufacturers generally do not 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 might see a dip in sales because of lost workdays, but a Reuters survey of about 220 companies showed that nearly half did not expect the long break to affect their business.
About 28 percent predicted a decline in output or sales, while a quarter projected a rise.
Meanwhile, financial market traders are worried that the 10-day shutdown could cause disruptions and unsettle the yen.
The US jobs report and several other key events are to take place while the market is closed, said Shogo Maekawa, global market strategist for 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.
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