SEOUL: As China and Japan prepare for an extended holiday period next week, Korea's tourism and retail sectors are bracing for a downturn.

Last month Beijing banned Chinese tour groups from visiting the country in retaliation over South Korea's decision to allow the US to deploy an anti-ballistic missile system (THAAD) on its soil.

Since then the number of Chinese tourists – who account for almost half of all overseas visitors to South Korea – has plunged by around 40% compared to the same period in 2016, according to figures from the Ministry of Culture, Sports and Tourism.

The issue has been a thorn in the side of the two countries' relations for much longer, however, with leading Korean retailer Lotte having had to close most of its 99 stores in China. This followed a consumer boycott that was instigated after it supplied a site for THAAD.

And it is also being hit domestically, where Chinese customers account for 70% of sales through duty-free shops.

Consequently, South Korea has sought to attract visitors from Japan and South East Asia, initially with some success, according to Yonhap, which reported Government figures showing the number of Japanese visitors up 20% year-on-year up to early April.

But in the past few weeks that growth rate has plunged as regional tensions have risen amid concerns about North Korea's possession of nuclear weapons. The Japanese government has gone so far as to issue instructions on what citizens should do in short time it would take for a missile to reach the country.

"There is a tendency for Japanese media to exaggerate the situation on the Korean Peninsula, and Japanese travellers seem to be postponing their trips because they are concerned," said a Korean tourism ministry official.

Data sourced from Yonhap, The Nation, Washington Post; additional content by WARC staff