Travel and Tourism Economy GDP to Contract by 3.6% in 2009

Travel News Asia Latest Travel News Podcasts Friday, 13 March 2009

On Thursday, the World Travel & Tourism Council (WTTC) revealed the results of its 2009 Economic Impact Research at its annual ITB Berlin press conference in the presence of industry leaders from different sectors of travel and tourism - high-level government representatives, and its research partner Oxford Economics.

"This year, the task of assessing travel and tourism trends and drawing up forecasts has been more challenging than ever because of all the uncertainties," Jean-Claude Baumgarten, WTTC President & CEO, said at the launch.

Two Difficult Years

Given the significant deterioration in travel and tourism activity through the second half of 2008 and the bleak macroeconomic forecast for 2009, WTTC's latest research shows that travel and tourism economy GDP will contract by 3.6% in 2009. And it is expected to remain weak in 2010 with only marginal growth, of less than 0.3%, currently predicted - on what will already be a weak 2009.

"Lower fuel costs will make a difference," said Baumgarten, "as will lower general inflation, which should reverse part of last year's squeeze on households' spending power. But given how widespread and deep the current recession is, it is inevitable that travel and tourism will continue to be affected."

"Indeed, as a relatively cyclical industry, its contribution to world GDP is expected to fall further in the next two years - from 9.6% in 2008 to just over 9% in 2010," Oxford Economics' Managing Director, Adrian Cooper, added. "Job losses are likely to be significant, with employment falling by around 10 million over the next two years towards 215 million in 2010, before recovering thereafter."

A key message from WTTC is that travel and tourism is a major contributor to job creation and poverty alleviation - "a fact that policy-makers would do well to recognise and take into account in their short- to medium-term strategies," said Baumgarten.

Baumgarten stressed, "The industry is not expecting a bail-out. It needs a supportive framework from government to help it weather the current storm. And governments would also do well to recognise travel and tourism's potential to energise the economy once the current crisis eases."

Investment and Corporate Travel to be Hit Hardest

Travel and tourism investment and corporate travel are expected to be the hardest hit this year. Real investment spending is forecast to decline by 5% in 2009 and a further 1.25% in 2010.

Residents' travel and tourism spending is likely to be the least affected, but even here a decline of 2.75% is projected for 2009, despite the substitution of domestic for some foreign travel.

Travel and tourism's contribution to GDP and jobs will still be positive longer term "nevertheless," said Baumgarten, "looking beyond the current crisis, travel and tourism is expected to resume its leading role in driving global growth, creating jobs and alleviating poverty."

"Emerging economies are expected to be the main engines of growth," Baumgarten added, "generating hundreds of millions of new travellers from among the growing middle classes in countries like China, India and Brazil - boosting international travel, but also creating an increasingly vibrant domestic tourism sector."

In developed countries, the increasing priority given to leisure activities can be expected to enhance demand for travel to existing and new tourism destinations once consumers regain confidence, while the popularity of short breaks - both domestic and international - will continue to expand in the medium to longer term.

Overall, the travel and tourism Economy is forecast to grow by 4% per annum in real terms over the next ten years. By 2019, travel and tourism will account for 275 million jobs, representing 8.4% of total employment across the world.

"This means that travel and tourism will continue growing in importance as one of the world's highest priority industries and employers," Baumgarten said.

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