|Tourism Industries International Travel and Forecast for the US - Chart #19
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The focus on political and institutional reform in Venezuela has relegated economic policy to the background which could potentially cause a setback for the economy. One consequence is the lack of agreement with the International Monetary Fund (IMF). As is often the case, the IMF may prescribe unpopular economic reforms as a requisite for standby loans. Even so, despite the political instability, the economic conditions in this case are not expected to deter the burgeoning travel from this significant market. Venezuela actually represents one of the more robust growth rates for the forecast period, averaging over 6% a year to yield a 38% growth by 2003, set to displace Italy's positioning by 48,000 visitors. This is definitely a market to consider.
This country's monetary policy hinges upon a one-to-one peg of its peso to the U.S. dollar. One outcome of this policy is the high level of interest rates for the business sector. Another outcome is the inability to conduct monetary policy. For example, the Brazilian crisis of 1999 had an effect on Argentina and the rest of Latin America. International investors pulled out in fear, domestic banks trimmed their portfolios to reduce exposure, domestic consumption suffered, recession loomed ever so closely and GDP decreased. For Argentina, the current political campaign is another economic liability as politicians may attempt to influence their constituencies with counterproductive economic policies. With these conditions in mind, we have estimated Argentine travel to the U.S. to initially decrease by nearly 2% in 1999. However, as some of these factors taper off or stabilize, we forecast a strong rebound of 5% in 2000 followed by escalating growth through the next three years, capping with a 25% overall growth rate to 657,000 Argentine visitors by 2003.
The Australian economy continues to perform well in 1999. Real GDP is expected to grow at a healthy 2.8% in 1999 and 3.3% in 2000. Other good economic news includes lower inflation than expected by the central bank, unemployment continues to decrease, and consumer spending remains robust. All of this contributes to a reversal of the 8% decline in 1998 to a gradual bounceback and growth in arrivals, hovering around the 2% level each year.
After a steep decline of 5.9% in 1998, real GDP for South Korea is expected to register a respectable recovery in 1999. Korea has made rapid strides on its road to recovery indicating that the worst may be over for the Korean economy. Strong consumer spending and a decrease in unemployment have led the quick recovery by almost a whole percentage point (from 8.1% to 7.2%). Inflation remains under control and the national currency, the Won, has appreciated against the dollar from over 1350 Won per dollar in September 1998 to about 1166 in June 1999. The strong currency largely accounts for the very robust estimated 29% increase in travel to the U.S. in 1999. On the fiscal side, the South Korean government continues to stimulate economic growth; tax cuts, business subsidies and the creation of a fund designed to facilitate credit to small businesses all ensure continued recovery. As a result, we have re-vamped our forecast. from May. We now expect Korean arrivals to the U.S. to grow by double digits throughout the forecast period to more than double its volume from 364,000 to 839,000 by 2003. This means they will regain some of their status as one of the top ten origin countries for overseas visitors to the U.S.
The Asian economic recovery is improving Taiwan's trade balance. Investor confidence has returned as shown by the evidence of foreign direct investment. Over 300 proposals for foreign direct investment were approved in the first quarter of 1999 (worth about one billion U.S. dollars). Consumer inflation remains under control. Fiscal policy is expansionary, encouraging consumer demand. The Central Bank's reluctance to increase interest rates is also seen as encouragement for consumer spending. The combination of regional economic recovery and government incentives bode well for Taiwanese travel to the U.S. Rising domestic consumer confidence concurrent with the regional recovery will account for a very strong reversal of the 13% decrease in travel to the U.S. experienced in 1998. As a matter of fact, estimates for 1999 show an increase of 16% for Taiwanese arrivals to the U.S. The remaining of the forecast period projects a continuation of this double digit growth rate, eventually rendering the second strongest growth of the top countries at 83%. The reality of this forecast is that Taiwan will become the eighth top country for arrivals versus the thirteenth position it currently holds.
|Chart #19 ECONOMIC ANALYSES OF SPECIFIC MARKETS -- LONG-TERM|