NIAC predicts employment could fall by 7,690 jobs this year due to decrease in tourism from coronavirus

March 6, 2020 Ryukyu Shimpo

The Nansei shoto Industrial Advancement Center (NIAC, Mitsuru Omine, chairman), announced March 5 their estimation for the effect the coronavirus would have on Okinawa’s economy.

The organization predicts that if from February through May, the number of tourists visiting Okinawa decrease by 1.68 million, resulting in a decrease in tourism-related revenue of 110.1 billion yen, would cause the loss of 7,690 jobs this year, raising the overall unemployment rate by 0.42%. However, there is the possibility that a quick resolution to the contagion would reduce the impact.

The NIAC calculated estimations related to the coronavirus collected by the Okinawa Convention & Visitors Bureau (OCVB) March 4, and calculated the effect on Okinawa’s economy based on this data.

Okinawa’s GDP had grown to 4.5362trillion yen as of 2018, however if individual and capital expenditure is curtailed by the reduced tourism, this year’s nominal GDP could go down by 76.7 billion yen, suppressing the real GDP growth by 1.5% for the year.

They also predict a rise in unemployment from businesses adjusting employment, as well as deflation caused by the drop in consumption, resulting in an estimated 0.2% decrease in consumer prices.

Combining both national and regional taxes, this would create a reduction in tax revenue of around 14.7 billion yen.

In recent years, employment in Okinawa had continued to improve as the growth of Okinawa’s economy had created a labor shortage, and in January of this year the number of employed people sat at 737,000 with a total unemployment rate of 3.0%.

Takeshi Kinjo, senior researcher at NIAC who calculated the economic effects of the coronavirus, indicates, “If the situation continued for a lengthy period of time, the severity of the job losses could be major.”

Conversely, if the situation has been resolved by the summertime, a peak season for tourism in Okinawa, a rise in the demand for travel could lead to a rally, especially for companies in the travel industry.

Kinjo says, “There are some positive indicators for the second half of the year for Okinawa’s economy.”

At the OCVB, where the estimations were collected, they forecasted that the loss in revenue from cruise ships cancelling their calls to port as well as the reduction of flights by airlines will total just over 10.1 billion yen in February, and that the losses could total 100 billion yen for the months of March through May.

They are also estimating that there were 180,000 fewer tourists in February, and that there would be 1.5 million fewer tourists from March through May.

(English translation by T&CT and Sam Grieb)

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