International travel and tourism has been one of the most dynamic sectors of the global economy in recent years, according to the new Industry Trends report launched today by Scotia Economics. International tourist arrivals increased a solid six per cent last year, the
strongest annual rise since 2004, to a record of almost 900 million.
“International travel receipts represent just a fraction of the more than US$13 trillion in worldwide merchandise exports,” said Adrienne Warren, Senior Economist, Scotiabank. “The industry is nonetheless an important contributor to output growth and employment for many nations. In Canada, for example, tourism spending, including domestic travel, accounts for 4.6 per cent of Gross Domestic Product (GDP) and more than 650,000 jobs.
“Tourism remains a high growth industry,” added Ms. Warren, “with international tourist arrivals rising over 40 per cent since the beginning of the decade, or an average of 4.4 per cent annually. Average growth in international travel receipts (in U.S. dollar terms) has been even stronger at almost 8 per cent over this period.”
The fastest growing travel and tourism regions are, for the most part, in emerging or non-traditional markets, including the Middle East, Asia and Africa. Latin America and the Caribbean have lagged, with strong gains in many Central and South American nations tempered by weak demand in the more mature destinations of the Caribbean and Mexico. The latter markets have been most affected by the sharp decline in the U.S. dollar over the past six years, the subsequent softening in U.S. travel abroad, and, more recently, stricter U.S. border entry requirements.
“Growth in international tourism to the developed economies of North America and Europe remains relatively modest,” said Ms. Warren. “These mature travel markets are still by far the globe’s largest destination regions, but together accounted for just under 62 per cent of international arrivals last year, down from over 69 per cent at the start of the decade.”
According to Ms. Warren, the slowdown in global economic activity will likely lead to greater belt-tightening by both households and businesses as income and profit growth slow. Heightened financial market volatility and tighter credit availability in the wake of the U.S. sub-prime mortgage crisis add another restraining factor. However, the economists still expect positive
growth overall for the industry in 2008-09, with developing nations continuing to outperform.
Scotia Economics provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.
Industry Trends will feature regular reports by a variety of contributors on the factors shaping the performance of key industries in the global economy. These reports can be found at www.scotiabank.com under Scotia Economics.
For further information: Adrienne Warren, Scotia Economics, (416) 866-4315, adrienne_warren@scotiacapital.com; David Hamilton, Scotia Economics, (416) 866-4212, david_hamilton@scotiacapital.com; Paula Cufre, Scotiabank Public Affairs, (416) 933-1093, paula_cufre@scotiacapital.com