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Typhoon third whammy for Japan's inbound tourism

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Natural disasters aren't the only thing denting tourist growth - changes to Japan's home-sharing laws have made it harder for tourists to get Airbnb-style rooms. Slower tourism growth is expected to weigh on third-quarter GDP.

Tokyo

JAPAN'S tourist boom has been one of the country's few unambiguous economic success stories.

While inflation and wage growth have stubbornly missed targets, tourist numbers have gone the opposite way. A target of 20 million visitors by the 2020 Olympics was met with five years to spare, then swiftly doubled.

However, a series of natural disasters over the past two months is weighing on this trend.

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Growth in inbound tourists showed an abrupt slowdown in July, according to latest figures, with the smallest year-on-year percentage increase since early 2013, when relations between Japan and China were at a nadir.

Japan's tourist body blamed the recent figures on the impact of a large earthquake in Osaka in June and historic floods in western Japan in early July that killed more than 200 people. Now Typhoon Jebi threatens to weigh further on tourists mulling a visit. The storm has left Japan's third most-used airport flooded and isolated, with no schedule in place for when operations can resume.

"Inbound tourist numbers won't be able to avoid a drop in September," said Koya Miyamae, senior economist at SMBC Nikko Securities. The typhoon's biggest impact "will be on inbound tourists."

A run of poor weather, including record-breaking heat and heavy rains, have already had some impact on tourism, Mr Miyamae said. Typically, July sees a record number of visitors, but that didn't happen this year due to the heavy rains.

The drop in July's tourist data caused so-called inbound-related stocks to slump, and Typhoon Jebi is further impacting the shares on Wednesday. Fancl Corp, whose cosmetics are favoured by many Asian visitors, fell almost 11 per cent, while fellow cosmetics maker Kose Corp, discount store operator Don Quijote Holdings and baby-products maker Pigeon Corp also dropped.

Natural disasters aren't the only thing denting tourist growth - changes to Japan's "minpaku", or home-sharing laws have made it harder for tourists to get Airbnb-style rooms.

For a government that has made tourism a centrepiece of economic policy, slower tourism growth is further unwelcome news. "There's a chance that the number of inbound tourists will fall in the third quarter, which would weigh on third-quarter GDP," Mr Miyamae says.

Visitor figures for August will be released on Sept 19.

READ MORE: Kansai airport flooded following Typhoon Jebi