The travel and tourism industry has lost more jobs in the current crisis than manufacturing, but can expect to grow at the expense of other sectors in the coming recovery.
John Walker, chairman of economic analyst Oxford Economics gave the Institute of Travel and Tourism conference in Dubai on Tuesday an upbeat assessment of the industry’s prospects.
He said: “The recoveries in equity prices and confidence indices are signs central bank and government policies are working. There is clear evidence we have some stability. There are reasonably good prospects we will start to see economic growth by the end of this year that will build through 2010.”
However, Walker warned: “Consumer spending is declining, and one of the key uncertainties is that this could go further.” The industry would have to contend with the impact of tax increases on spending, he said: “Taxes have to rise because the costs [of the government bailout] have been huge.”
He forecast the UK economy would barely grow next year, suggesting a mere 0.1% increase in GDP following an expected 4.1% decline in 2009. “Recovery in 2010 will be relatively modest,” he said, adding that this view placed him “in the optimistic camp” among economists.
Walker repeated his assertion, made last month at the World Travel and Tourism Council summit and reported by Travel Weekly, that the crisis had seen “job losses in travel and tourism around the world at least as great as in manufacturing”.
Yet he said tourism would have greater opportunities to recover, particularly at the expense of financial services. “We have to face considerable uncertainty, but there are reasonably good prospects for tourism,” he said.
Walker forecast the oil price would not return above $100 a barrel, but said inflation could rise to 5% a year “or maybe even 6%”.
He conceded his forecasts could prove over-optimistic, saying: “There is a risk of a much sharper fall in GDP, there is clearly a risk of inflation and a risk of an L-shaped recovery [meaning recession followed by stagnation].”
Walker added that economists bore some blame for the crisis. “We did not see it coming and it has been far worse than anyone expected.”
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