ADB warns of slowing of Pacific tourism growth
Updated
Pacific Island nations can expect a new slowing of growth in the tourist industry this year, according to the Asian Development Bank. Tourist departures to the Pacific from Australia and New Zealand grew strongly during the second half of 2009 and those from Australia were surprisingly strong, despite the Global Economic Crisis. The ADB's Pacific economist, Craig Sugden, told Jemima Garrett that growth is now expected to slow, mainly because a slowing of outbound tourism from those 2 countries.
Presenter: Jemima Garrett
Speaker: Craig Sugden, Pacific Economist with the Asian Development Bank
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SUGDEN: The problem there is basically the poor outlook for Australia and New Zealand. In Australia the forecast is that outbound tourism will only grow at four-point-one per cent in 2010, compared to seven-point-six, that's total outbound tourism. And similarly New Zealand's official forecast is for a one-point-one per cent decline in 2010 in outbound New Zealand tourism. So the key source markets are slowing. But the other factor is that there were some once-off events in 2009 that helped pick up tourism numbers towards the second half of the year, and they won't be repeated in 2010.
GARRETT: Which countries are likely to be hit hardest by the slowing in tourism growth?
SUGDEN: Cook Islands, Vanuatu, Samoa and Tonga are probably more exposed than the Fiji islands.
GARRETT: And what about the impact of these cyclones in Cook Islands and Tonga, how much difference will they make on top of this slowing in tourism?
SUGDEN: The cyclones are definitely bad news for Cook Islands and Tonga. Cook Islands is perhaps the most exposed because Aitutaki is one of the prime tourism areas, and it's had extensive damage.
GARRETT: Will the slowing in tourism growth be bad enough to see tourism actually go backwards in some countries?
SUGDEN: No we don't expect tourism to go backwards, we think there will be continued growth, but it's a slowing in growth and the reason that's important is that tourism helped the economies a lot last year and we won't be seeing that sort of support this year.
GARRETT: You mentioned that the main problem is a slowing out of Australia but in fact it was growth from Australia last year which kept the Pacific tourism industry alive, why is Australia now not providing that impetus?
SUGDEN: Well there was a decline in discretionary spending in Australia that is going to flow through into tourism. But the Pacific had some one-off effects. For example Fiji was recovering from the very poor year in 2008 so it was able to achieve a much higher growth rate than the average.
GARRETT: What can countries do to help their tourist industries through this expected purple patch, is it time for more promotion campaigns or special deals?
SUGDEN: Well marketing is certainly central and one issue that we're beginning to explore more is whether the Pacific should be marketing as a general block in order to spread its appeal. But the key remains keeping costs down, for example airline deregulation, allowing the budget airlines in has been central to boosting the industry.
GARRETT: How long do you expect this bad patch to last?
SUGDEN: We expect 2011 to be better than 2010 so this is really a short term effect arising from the global economic crisis.
GARRETT: What effect will this slowdown during 2010 have on jobs and economies?
SUGDEN: Tourism had provided extra support for the economies last year and this was keeping employment up higher than it otherwise would have been, but without the support from tourism this year we're going to see more pressure on economies, more pressure on household incomes, and in particular more pressure on what you could think of this working poor, the low-income earners in the economy.
GARRETT: In fact this is one area that the Asian Development Bank has expressed concern about, about the plight of the working poor. How can governments respond to help people in that category?
SUGDEN: The key response is to try to rebuild economic activity through sound economic and fiscal management, but it's very likely that additional measures will be needed in the form of social protection, social safety nets. It will take some time to put those in place, but the recent experience highlights more attention is need to those areas of policy.
