Projected Slower Economic Growth Could Affect Intra-Asian Tourism

GDP growth in ASEAN

Consultant Standard & Poor’s Ratings Services revealed yesterday its economic growth expectations for this year in asia Pacific, predicting now a deterioration of GDP growth compared to earlier forecasts. In a report titled “Asia-Pacific Could Be Entering A Steady State Of Slower Growth,” S&P said weaker global trade and the burst of a speculative real estate bubble in China would weight down on growth perspectives. This week, stock exchanges and currencies across Asia stumbled due to growing concerns about China’s economic slowdown. 

According to S&P, overall GDP in Asia Pacific may expand by only 5.5 percent in 2015, instead of earlier forecasts of 5.6 percent. “While Asia Pacific remains the highest growth region globally, the outlook continues to be subdued. The effects of the two largest economies- USA and China- in the world are, each in their own way, weighing down activity,” highlights the report.

USA subdued growth in imports affect particularly South Korea and Taiwan. China property market’s burst is hitting also GDP growth in Hong Kong, Australia, Taiwan, South Korea, Singapore and Malaysia.

Growth is still forecast for the four largest economies of ASEAN according to S&P- Indonesia, Malaysia, the Philippines and Thailand. The four large economies are now due to grow by 5% on average this year. Slow growth is expected for Thailand (3.4%) and Malaysia (4.6%) while Indonesia and the Philippines are projected to grow respectively by 5.4% and 6%. Singapore’s economy would grow around 2.5% this year.

The slowdown could then affect travel patterns within Asia with more people taking a more careful approach to travel abroad. Already travels out of Indonesia is down since the beginning of the year while it remains stagnant in Malaysia. Earlier this year WTTC predicted a growth of spending for Malaysian travellers by only 1%.