“Overseas Travel Is a Luxury”: 80% of Japanese Lack Passports as Three Decades of Stagnation Entrench Travel Aversion

Long Working Hours and Weak Yen Block Japanese Travelers from Going Abroad
Foreign Tourist Arrivals and Spending Reach Record Highs
Urgent Need for High-Value Tourism and Regional Diversification to Capitalize on Weak-Yen Windfall

While tourists from around the world flock to Japan, overseas travel among Japanese citizens remains mired in a prolonged slump. Japan welcomed a record 42.68 million foreign visitors last year, while only 14.73 million Japanese traveled abroad and just 18.5% held passports. Long working hours and an inflexible vacation culture have constrained long-distance travel, while language barriers, sluggish real-wage growth and the historically weak yen have raised the threshold for overseas trips even further.

Japanese Travelers Stay Home Despite Lower Passport Fees

According to the travel industry on Tuesday, the number of South Korean tourists visiting Japan this year could exceed 10 million for the first time. Japanese arrivals in South Korea, however, are expected to remain well below 4 million, less than half that figure. The widening imbalance in tourism between the two neighboring countries reflects a fundamental shift that has left Japanese consumers increasingly reluctant to travel. The Japanese government sharply reduced passport issuance fees last month to below $63. The measure was intended to revive outbound travel, but lower fees alone are unlikely to persuade Japanese citizens to venture overseas. Japan’s retreat from travel reflects a decades-long trend reinforced by the weak yen and rising prices.

Japan’s passport ownership rate stood at just 18.5% in 2025, according to calculations based on passport statistics from the Ministry of Foreign Affairs. Roughly five out of every six Japanese citizens therefore lack a valid passport. The rate is markedly lower than approximately 60% in South Korea and the United Kingdom and 50% in the United States. Japan’s outbound travel market has also failed to keep pace with the rapid global tourism recovery since the COVID-19 pandemic. According to an overseas travel report by major Japanese travel agency JTB, outbound traveler numbers in South Korea and Taiwan both recovered to 99% of their 2019 levels in 2024, while Japan reached only 64.8%. Japan’s recovery has remained exceptionally slow even after airline capacity and travel sentiment rebounded following the pandemic.

Workplace Pressure and Language Anxiety Entrench Overseas Travel Slump

Japan’s long working hours and restrictive vacation culture have played a major role. Although paid leave is guaranteed, many employees hesitate to take extended consecutive vacations because they fear imposing additional workloads on colleagues. Vacations are also concentrated around specific periods, including the major Obon holiday in mid-August and the year-end and New Year holidays. The resulting nationwide surge in travel pushes up accommodation and transportation costs while overcrowding tourist destinations. These conditions have impeded the development of a culture in which workers take one or two weeks off for long-haul travel, as is common in Europe.

Psychological barriers surrounding foreign languages and unfamiliar environments are also high. Japanese travelers tend to view the process of obtaining a passport, booking flights and accommodation, and researching local transportation and payment systems as burdensome. A survey conducted last year by Japanese travel agency Reiwa Travel among 4,127 people aged 18 to 29 found that respondents with no overseas travel experience reported high levels of anxiety across nearly every category, including cost, language, illness and public safety. The prolonged decline in overseas travel has also created a vicious cycle in which the experiences of parents are no longer passed down sufficiently to their children.

Table 1. Constraints on Overseas Travel Among Japanese Citizens

Weak-Yen Shock Hits Japanese Households

Cost remains the most immediate factor suppressing overseas travel demand among Japanese consumers. In a JTB survey conducted last year, 78.9% of respondents said they had no plans to travel abroad. “Travel costs are too high” was the most frequently cited reason at 33.6%, followed by “insufficient household finances” at 26.4% and “the weak yen” at 24.4%. The results indicate that household purchasing capacity takes precedence over cultural preferences.

According to JTB, the average cost of an overseas trip by a Japanese traveler was estimated at $2,098 last year, up 6.2% from the previous year. Airfares, overseas accommodation and food prices all rose, while currency conversion costs also swelled. For Japanese workers paid domestically, overseas travel has become a category of consumption in which prices are rising faster than incomes.

Exchange-rate movements have intensified the burden this year. The yen fell to 162 per dollar at the end of June and approximately 164 per dollar at the end of July. Its inflation-adjusted real effective exchange rate also remains near its lowest level since the early 1970s. Japan’s prolonged productivity stagnation lies behind the historic weakness of the currency. According to the Japan Productivity Center, the country’s hourly labor productivity stood at $60.10 on a purchasing-power-parity basis in 2024, ranking 28th among the 38 members of the Organisation for Economic Co-operation and Development (OECD). Labor productivity per employed person stood at $98,344, placing Japan 29th overall and last among the Group of Seven (G7) economies. Real labor productivity growth also fell to minus 0.6%.

Low productivity has weakened the economy’s capacity to raise wages, while sluggish domestic demand has increased its reliance on fiscal spending. The International Monetary Fund (IMF) projects that Japan’s gross general government debt will reach 203% of gross domestic product (GDP) this year. Interest expenditure is expected to nearly double from 1.5% of GDP in 2025 by 2031, while health care and long-term care spending driven by population aging is projected to rise by 1.6 percentage points of GDP by 2040.

Takaichi’s $2.32 Trillion Growth Gambit Intensifies Pressure on Yen and Bond Yields

Against this backdrop, Japanese Prime Minister Sanae Takaichi has unveiled a growth strategy aimed at mobilizing more than $2.32 trillion in combined public- and private-sector investment through fiscal 2040. Her government is also pursuing tax cuts and fiscal injections to stimulate demand. Japan’s 10-year government bond yield, however, rose as high as 2.9% on July 9, as concerns over heavier bond supply and rapidly increasing interest costs from fiscal expansion weighed on the broader bond market. With the Bank of Japan’s (BOJ) policy rate already at 1%, large-scale fiscal expansion that fails to generate productivity gains will inevitably intensify simultaneous pressure on government bond yields and the yen.

The United States joined Japan’s currency defense after the yen plunged to a 40-year low, but the impact of the intervention proved short-lived. The United States and Japan deployed $53.07 billion to purchase yen on July 31. It marked the first U.S. market intervention to support the Japanese currency since 1998. Much of the effect dissipated in less than 10 days. The exchange rate came under renewed upward pressure because the underlying conditions driving yen selling remained unchanged despite the massive deployment of funds.

The yen carry trade, in which investors borrow low-interest yen to purchase higher-yielding assets, also continues. Faster BOJ rate increases would raise government debt-servicing costs and deepen the risk of weaker domestic demand, while hesitation would sustain capital outflows into higher-yielding foreign assets. If the Takaichi administration’s tax cuts and fiscal expansion undermine confidence in Japanese government bonds, the simultaneous sell-off in the yen and sovereign debt known as the “sell Japan” trade could return. This explains why U.S. Treasury Secretary Scott Bessent, while joining the coordinated yen purchases, has pressed the BOJ to raise interest rates and the Japanese government to restore fiscal discipline. Without improvements in productivity and a recovery in potential growth, U.S. support is likely to serve only as a temporary defensive line that slows the currency’s decline without reversing the broader depreciation trend.

Japan Must Expand Tourism Industry to Harness Weak-Yen Windfall

The prolonged weakness of the yen has reversed the direction of demand in Japan’s tourism market. For Japanese households, it has become a barrier that raises the cost of overseas travel. For foreign visitors, it has effectively discounted the cost of accommodation, dining and shopping in Japan. As the weak currency erodes Japanese citizens’ purchasing power abroad, it strengthens that of foreign visitors within Japan. Spending by international visitors reached $59.38 billion last year, up 16.4% from the previous year. Per-capita spending stood at $1,438. Japan’s travel account surplus reached an all-time high of $39.82 billion, according to the Ministry of Finance’s balance-of-payments data.

Japan has little choice at this stage but to convert the weak yen into an opportunity to expand tourism revenue. With manufacturing losing its capacity to absorb domestic employment and regional population decline eroding local commercial districts, tourism provides demand across accommodation, food services, transportation and retail. The Japanese government estimates that tourism-related industries employ 9 million people. Employment in high-value-added sectors such as technology and finance remains concentrated in major cities and among specialized professionals, making tourism a viable growth pillar capable of generating foreign-currency revenue and jobs nationwide.

This imperative underpins the government’s targets of 60 million foreign visitors and $94.21 billion in tourism spending by 2030, set out in the Fifth Tourism Nation Promotion Basic Plan finalized in March. If the spending target is achieved, the related economic impact is estimated to reach $188.42 billion. The economic benefits of the weak yen could remain constrained if foreign visitors come to view Japan primarily as a low-cost destination. Combining accommodation, fine dining, medical services, cultural experiences and integrated resorts could extend visitor stays and raise per-capita spending, thereby increasing the tourism industry’s added value. The disruption to residents caused by overtourism should be addressed through expanded transportation networks, reservation systems, tourism taxes and regional dispersal policies. Restricting hard-won foreign demand would first damage local businesses and employment.

The remaining task is to redirect tourists and spending concentrated in major cities toward smaller urban centers. Foreign visitors recorded a cumulative 177.86 million overnight stays last year, but Tokyo, Osaka, Kyoto and Hokkaido accounted for 64.8% of the total. Major cities burdened by heavy tourist inflows face congestion and surging accommodation prices, while depopulating regions contend with shrinking commercial districts and declining employment. Expanding regional airports, railways, accommodation facilities and multilingual payment networks would convert the congestion costs borne by major cities into income for regional economies.