Prompted by the deterioration in global financial conditions in the second half of 2011, the continuing eurozone debt crisis and the threat of a return to recession in the United States, the World Travel & Tourism Council (WTTC) has downgraded its growth forecasts for 2011 and 2012. The new rates of growth have been pegged at 3.2 percent and 3.3 percent for 2011 and 2012 respectively. The numbers measure direct contribution to GDP. The WTTC forecast growth of 4.5 percent and 5.1 percent in March.
Long-term prospects remain strong, the WTTC says, predicting ten-year growth holding steady at around 4 percent per year between 2011 and 2021. This is down marginally from the annual growth of 4.3 percent forecast in March 2011, with the reduction due almost entirely to the downward revisions to growth in 2011 and 2012.
The latest economic data points to a slowdown in economic activity in the spring and summer of 2011, the WTTC says. GDP growth in the USA is down from over 3 percent in the fourth quarter of 2010 to around 1.5 percent in the second quarter of 2011, with similar levels in the eurozone and growth as low as 0.5 percent in the UK in Q2 2011. Nevertheless, latest Travel & Tourism indicators show that people are still traveling – with international air travel and hotel occupancy rates up.
However, while travel and tourism data for the first half of 2011 has been largely positive, continued concerns around the state of the economy – particularly in the U.S. and Europe – mean that confidence levels are low, the WTTC says. As the global economic recovery loses momentum and impacts industry performance, the outlook for travel and tourism will be weaker in the second half of the 2011 than it was in the first six months.
The latest WTTC research indicates:
• Global direct travel and tourism GDP is now expected to grow by 3.2 percent in 2011 and 3.3 percent in 2012 compared to WTTC’s initial growth estimates (published in March 2011) of 4.5 percent and 5.1 percent respectively
• Global travel and tourism is expected to grow by an average 4 percent per year between 2011 and 2021. This is down marginally from the 4.3 percent for the same period that was forecast earlier in the year, with the decline due almost exclusively to the downward revisions in 2011 and 2012
• travel and tourism is predicted to account for 69 million more jobs by 2021 – almost 80 percent of which will be in Asia, Latin America, the Middle East and Africa
“Travel & Tourism is one of the world’s great industries, providing nine percent of global GDP and 260 million jobs; it drives economic growth, business relationships and social mobility. The industry is still growing strongly – but growth is lower than we had previously expected for both 2011 and 2012 due to the prevailing economic conditions and the disruption to travel patterns caused by natural disasters and social upheaval during 2011," David Scowsill, WTTC president and CEO said.
"That said, growth of 3.2 percent during 2011 would still be a laudable achievement and would rank the travel and tourism industry ahead of world GDP growth, expected to be 2.8 percent, and most developed countries," Scowsill said.
The two big themes of 2012 are likely to be the rebound in tourism in the Middle East following the social upheaval of 2011 and the recovery of Japan, the world’s third largest travel and tourism economy, following the earthquake and tsunami, the WTTC says.
The latest report on Japan indicates that the recovery is occurring in line with the WTTC's most optimistic scenario which states that the number of international tourist arrivals will recover by early 2012, along with a faster recovery in Japan’s own travel and tourism demand.
"In the long term the prospects for our industry are good and we maintain our ten year growth rate above 4 percent. Travel and tourism is predicted to account for 69 million more jobs by 2021, stimulating employment across the world, encouraging export-led growth of economies, and reducing poverty in developing economies," Scowsill said.