The Kansai region, home to Osaka, Kyoto, and Kobe, is poised for modest but steady economic growth through 2026, largely driven by a robust recovery in inbound tourism and the highly anticipated Expo 2025 Osaka, Kansai. According to a recent report by the Japan Research Institute, this positive outlook offers exciting prospects for visitors, but also highlights potential challenges travelers should keep in mind when planning their trips.
The Economic Forecast: A Snapshot
The report forecasts that the real Gross Regional Product (GRP) for the Kansai economy will grow by +0.9% in fiscal year 2024, followed by a +1.0% increase in 2025, and a +0.8% rise in 2026. While these figures represent moderate growth, they underscore the region’s resilience, especially as it navigates challenges like slowing demand from China and global trade uncertainties.
Inbound Tourism as a Key Driver
The primary engine behind this growth is the remarkable surge in international tourism. In 2023, spending by foreign visitors in the Kansai region reached a record-breaking ¥3.4 trillion. This trend is expected to accelerate significantly with the arrival of Expo 2025.
The Expo 2025 Effect
Expo 2025 is projected to be a massive catalyst for the local economy. The Japan Research Institute estimates the economic impact of the event on the Kansai region to be approximately ¥2.9 trillion. Visitor spending is forecast to soar, potentially reaching an estimated ¥4.6 trillion in 2025. For travelers, this translates into a vibrant atmosphere, new attractions, and a wide array of international events and cultural showcases.
Potential Challenges for Travelers to Consider
While the economic outlook is positive, the report also sheds light on some underlying issues that could impact the travel experience.
Labor Shortages
A significant challenge facing the region is a growing labor shortage, particularly in the accommodation and food service industries. The increased demand from Expo 2025 is expected to exacerbate this issue. Visitors may experience longer wait times at popular restaurants or witness strained services at hotels. Planning ahead and making reservations well in advance will be more crucial than ever.
Global Economic Headwinds
The report also notes that external factors, such as a slowdown in the Chinese economy and global trade tensions, pose risks to Kansai’s export-reliant manufacturing sector. While this may not directly affect most tourists, it’s a reminder of the complex global environment in which this growth is occurring.
What This Means for Your Visit to Kansai
For anyone planning a trip to Osaka and the surrounding Kansai region between 2024 and 2026, the economic forecast points to an exciting and dynamic period. The region is investing heavily in infrastructure and hospitality to welcome the world for Expo 2025.
Visitors can expect a lively and bustling environment filled with new opportunities for exploration. However, it is wise to prepare for a popular and potentially crowded destination. Booking flights, accommodations, and key attractions early is highly recommended to navigate the potential impacts of labor shortages and high demand. Ultimately, the coming years promise to be a memorable time to experience the unique energy and culture of Kansai.
