Coronavirus will hit tourism-driven economies’ growth

Outlook

More than 40,000 people have been treated for the new coronavirus, largely in China but also in at least 25 other countries. The restrictions that many governments have imposed on travel with China will remain in place until the number of new cases falls sharply.

Tourism is likely to recover quickly when the restrictions ease but if this is not until May or June, vulnerable countries will suffer sharply lower GDP growth.

Tourist spending contributes more than 10% of GDP in Hong Kong, Thailand and Cambodia, and the Chinese are their most frequent visitors. Tourist spending is also a sizable engine of growth in Singapore, Malaysia, Vietnam and Australia, underpinned by millions of Chinese visitors.

Impacts

• Despite lower 2020 revenue, nations will still invest to attract more Chinese tourists given untapped potential to increase their numbers.
• In 2018, 600,000 Chinese travelled for healthcare and this market will only grow; sports tourism is another rapidly growing market.
• Anti-Chinese racism may linger after the virus passes, slowing the speed at which Chinese tourists return to some nations.
• If the US government uses China’s weakness to press its own agenda, the number of Chinese tourists to the United States may keep falling.