TOURISM recovery in Asia is projected to slow down in the second half of the year as arrivals from major markets are seen moderating.
According to the latest paper by Oxford Economics, this is one of the reasons the group is forecasting economic growth in the region to sputter in the second half of the year, although Chinese tourists “should continue to provide some impetus.”
“Growth in tourist numbers from elsewhere is likely to ease. First, the boost purely from pent-up demand may soon run its course. Second, consumers in advanced economies, particularly the US, will likely moderate their spending plans in the face of an uncertain economic environment. Others may follow as their home economies catch a cold,” the group said.
The independent economic advisory group has projected a “mild recession” in the US toward yearend as consumers use up their Covid-era savings and companies slow down their hirings.
Arrivals in Vietnam, SG up 80% of 2019 levels
The group also noted “capacity constraints of travel destinations,” despite the limited data it has gathered on this front. “But we suspect constraints are already biting well before tourist arrivals reach their pre-pandemic level and will continue to do so until supply readjusts to meet demand.”
It said growth in the Philippine economy in the first half of the year was still driven by the “large business process outsourcing sector, although tourism certainly helped.” The local economy, as expressed in the gross domestic product, grew by 5.3 percent in the first half of the year.
Recovery of the tourism sector in Asia remains spotty, with Vietnam and Singapore the “most advanced, with arrivals at over 80 percent of 2019 levels in [July]. Much of the rest of Southeast Asia is near 75 percent. Taiwan is least advanced at about 50 percent.” No data was available for China.
The group noted that as of June 2023, Macau and Hong Kong were still the main beneficiaries of China’s outbound travel market in the first half of the year, with arrivals from China recovering to 70 percent and 54 percent, respectively, of pre-pandemic 2019 levels. “Malaysia (47 percent), Vietnam (45 percent) and Singapore (43 percent) were the next best. For the rest, Chinese arrivals were about 15 percent-35 precent of 2019 levels.”
The problem with China
As per the group, “The China story is still one of a pick-up. Arrivals from China will likely increase more quickly in the [second half of 2023] than they did in [first half] in many countries, given easing outbound capacity constraints. There are risks to that view, though, given Chinese consumers appear to be rapidly losing their gusto,” due to expensive outbound airfare arising from the higher fuel prices.
It added that China’s high unemployment, “negative wealth effects from the troubled property sector, and weak wage growth do not make a strong backdrop for splashing out on foreign holidays.”
The Department of Tourism (DOT) hopes the launch of the electronic visa platform by the Department of Foreign Affairs, initially in Shanghai, will help boost the arrivals of Chinese tourists in the Philippines. Prior to the pandemic, there were 1.7 million Chinese visitors in the country, making China the second largest source market for tourists, following the South Koreans. From January to August 30 this year, China was in fourth place, contributing 173,319 visitors to the total 3.63-million foreign tourists that arrived. (See, “DOT lauds e-visa for Chinese tourists; but will they come?” in the BusinessMirror, July 31, 2023.)
Image credits: Lakhesis | Dreamstime.com, Oxford Economics
