2009 has seen the worst recession since the 1930s, with global GDP contracting by an estimated 1.3 percent. While there are tentative signs that the economic cycle is now turning, driven by unprecedented policy stimuli, reviving credit markets, and recovering asset prices, recovery is expected to be gradual – and a second dip into recession early next year cannot yet be ruled out.
“As a result, travel and tourism economy GDP is now forecast to decline by 5.5 percent in 2009,” said Jean-Claude Baumgarten, president and CEO of the World Travel and Tourism Council (WTTC), announcing WTTC’s latest forecasts at World Travel Market yesterday. Baumgarten was joined by Adrian Cooper, managing director of Oxford Economics, WTTC’s research partner.
“This means that travel and tourism’s contribution to global GDP will fall this year to less than 9.3 percent from 9.6 percent in 2008,” Baumgarten noted, “and this is also down from the 9.4 percent predicted at the start of 2009.
“Moreover,” he added, “activity in 2010 is likely to be flat at best.”
Nevertheless, the updated forecasts from WTTC and Oxford Economics show that there has been no change in the projected long-term trend growth of 4 percent per annum forecast for travel and tourism over the coming decade, making it a key engine of expansion in the longer term.
“In the aftermath of the financial crisis that started last summer, the global economy contracted at its steepest rate in post-war history,” said Adrian Cooper. “However, recent indicators suggest that the global economy has passed its trough and some forecasts for 2010 are now being upwardly revised.
“Key recovery drivers are unprecedented monetary and fiscal stimuli, reviving credit markets and recovering asset prices,” Cooper explained. “But there are good reasons for caution and a second dip into recession early in 2010 – what we call the double-dip scenario – cannot yet be ruled out.”
Travel and tourism economy GDP growth in 2008 slowed to 1 percent, WTTC announced, as significant momentum was lost in the second half of the year, and the deterioration intensified early in 2009, resulting in:
• international air passenger traffic contracting by 6 percent year on year in the first eight months of 2009;
• monthly data for 68 countries covering 80 percent of global tourist trips showing overnight visitor arrivals on a similar path (January to September growth is estimated at 6 percent year on year); and
• widespread losses across all regions, although currency effects and domestic tourism have provided some support.
Nevertheless, there are tentative recovery signs for travel and tourism with the most recent data indicating that the worst has passed. Given the deeper-than-expected global recession and tourism indicators for the year so far, the contraction in travel and tourism activity is now expected to be larger than anticipated in January. Corporate travel cuts, household curtailment of leisure travel (especially international trips), and the postponement of investment plans for tourism infrastructure have all been as bad as expected.
“Travel and tourism clearly continues to face challenging times,” said Baumgarten, “especially if the tentative recovery underway loses momentum or if the A(H1N1) influenza pandemic were to intensify and become more virulent.
In the face of such difficult circumstances, travel and tourism requires the global policy environment to be supportive, Baumgarten stressed. Policy-makers, therefore, need to be wary about placing extra burdens on this previously-dynamic sector at this crucial time when profitability is already under severe pressure.
“If the challenging times facing travel and tourism are ignored by governments,” he said, “then its role in employment creation and poverty reduction could be seriously undermined.”