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Tourism proves as a resilient and stable economic sector

18 June 2002

 Tourism has shown again, how resilient and stable economic sector it is. Compared to the preliminary estimates issued last January, updated information demonstrates that world tourism only experimented a small reduction in 2001. According to recent and more precise information, it now appears that the  decrease in world tourism arrivals has been adjusted to - 0.6 per cent.

Worldwide there have been 692 million international tourist arrivals in 2001 corresponding to a decrease of - 0.6 per cent or 5 million down from the 697 million of 2000. Tourism growth already decelerated before September 11 because of the deterioration in economic conditions affecting major North American, European and Asian economies at the same time, with worldwide economic growth dropping to 2.5 per cent in 2001, down from 4.7 per cent in 2000, with some economies even slipping into recession for part of the year. The terrorist attacks of 11 September severely aggravated the situation and as a result, for the first time since 1982 (the times of the second oil crisis, martial law in Poland, the Falkland war and the conflict between Israel and Lebanon) the worldwide number of international tourist arrivals showed a slight decrease. 

“International tourism experienced a serious crisis but showed again how resilient it can be,” said WTO Secretary–General Francesco Frangialli. “On one hand it was surprising to see a decrease in an industry that is used to constant growth, on the other it is encouraging how stable this economic sector is. Its decrease was temporary and somewhat less painful than we had expected. Decrease in some other industries, information technology for example, can be much volatile and can have stronger effects. We are confident that our predictions during ITB, that tourism growth will be restored by the end of this year, will be fulfilled.”

Not every destination has been equally affected. Most affected were South Asia (a drop of -24 per cent in the period September-December 2001), Americas (-20 per cent) and Middle East (-11 per cent), in all three cases following an already weak  January-August period. For the whole year Americas and South Asia dropped by –6 per cent, Middle East  by –6 per cent. Africa (+4 per cent) still finished the year with an increase. Europe recorded a small decrease of –0.6 per cent.

International Tourism Receipts

For many countries, both developed and developing, tourism is a very important source of foreign currency earnings and employment. Worldwide receipts amounted to US dollar 463 billion in 2001, which means US$ 1.3 billion or euro 1.4 billion a day. Compared to 2000 the receipts decreased -2.6 per cent from 475 billion. Expressed in euro international tourism receipts amounted to 517 billion, up 0.4 per cent from 515 billion in 2000. In 2001 US dollar appreciated 3 per cent compared to the euro (US$ 1.12 euro in 2001, 1.08 in 2000). Average receipts per arrival were US$ 670 or euro 750.

“About a half of all world’s tourism receipts are earned in Europe, so WTO decided to start following financial statistics also in euro,” Mr. Frangialli explains. 

In real prices receipts expressed in US dollar decreased by -2.6 per cent, while expressed in euro they still grew by 0.4 per cent. In constant prices (i.e. corrected for inflation) receipts expressed in US dollar decreased by -5.3 per cent and expressed in euro by –2.1 per cent. 

Decrease in receipts exceeded decrease in volume somewhat, both because of September 11 and the economic downturn already felt before. In economic tight times consumers typically react not so much by refraining from travel but by trading down, i.e. they choose for instance for shorter stays in less expensive destinations with travel and accommodation in lower categories. Second, the shift towards closer-by destinations accessible by land transport after September 11 depressed spending levels even more.

Half of all receipts are earned by Europe, Americas 26 per cent, East Asia and the Pacific 18 per cent, Africa 2.5 per cent, Middle East 2.4 per cent and South Asia 1.0 per cent.

Outlook 2002

In the first part of the year it has become evident that recovery is underway: fear is progressively fading away and business is gradually returning to normal. Recovery is most visible in intraregional travel, and in the regions of Pacific, Europe and Africa. East Asia may expect a very positive growth influenced by the FIFA World Cup.

On the whole economic conditions seem encouraging, although signs may sometimes be contradictory. Interest rates are still low, inflation is generally under control, consumer confidence is improving and commodity prices are also relative low although fuel price is somewhat volatile.

In it’s World Economic Outlook of last April the International Monetary Fund (IMF) was much more optimistic about the prospects for the world economy than in the issue of December last year. Forecast for most countries were adjusted upwards by several tenths of percentage points. In the latest released data beginning of June, IMF even raised its forecast for global economic growth in 2002 again, to 2.9 per cent.

Furthermore, for the midterm some pent up demand of postponed travel might be noticeable. For some destinations demand might be negatively influenced by the act that operators have reduced capacity. “The situation is not yet completelyfavourable; there still exist uncertainties about new acts of terrorism, the conflict between Israel and Palestine and the tension raised between India and Pakistan,” Mr. Frangialli warned.

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