Weekly Economic Briefing

Tourism Economics

27 June 2017

Global Overview

  • The tourism sector is a large, important component of many countries' export basket. Although growing in absolute terms, the relative competitiveness of tourism exports depends of exchange rate, security, and geopolitical factors.
  • US travel exports have slowed in 2017 hitting a 10-month low in April. Although speculation has mounted about whether US policies are to blame, it is still too early to identify the reason or whether the slowdown will persist.
  • Tourist arrivals to the UK have skyrocketed following the collapse in sterling, as record numbers of foreign tourists visit the UK. Europe is also seeing a boost but the drivers are different.
  • Chinese government policies restricting tourism to Korea are causing a severe drop-off in Chinese arrivals and if continued it could shave close to 0.3 percentage points off Korean growth.
  • The increase in outbound Chinese tourism has had a global economic and geopolitical impact. However, it appears much of their vaunted spending power might be overestimated as a lot of the outlay seems to be on financial assets instead of foreign-produced goods and services.
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US

Although the US tourism trade surplus has been on a continuous upward trend, the recent strength of the US dollar has negatively impacted the sector.

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UK

Tourism in the UK has been healthy, with the depreciation in sterling increasing the spending power of those visiting. For UK consumers, overseas travel is more expensive and in decline.

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Europe

The tourism industry is fundamental to a number of southern European countries. A weaker pound may be bad news, while the impact of terror attacks is hard to parse.

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Japan & Developed Asia

South Korea's tourism industry is reeling from a slump in Chinese tourist numbers. The sector will need to display all its fabled resilience to survive.

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Emerging Markets

The US government estimates the average Chinese visitor spends between $6000 and $7200 per trip. However, it turns out much of this may be on financial assets instead of goods and services.

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Standard Life Investments’ Global Strategy team provide regular analysis of the key economic data that has been influencing financial markets.

Available on a weekly basis, the Weekly Economic Briefing takes a detailed look at the global economic issues that have been impacting our investment strategy. The regional approach aims to provide an easy-to-navigate guide to the most recent developments in the global economy.

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