Académique Documents
Professionnel Documents
Culture Documents
SEUROPEAN
TOURISM 2016
TRENDS & PROSPECTS
APRIL 2016
The designations employed and the presentation of material in this publication do not imply the
expression of any opinions whatsoever on the part of the Executive Unit of the European Travel
Commission.
Data sources: This report includes data from the TourMIS database (http://www.tourmis.info), STR
Global, IATA, AEA and UNWTO.
Economic analysis and forecasts are provided by Tourism Economics and are for interpretation by
users according to their needs.
Cover: Europe, Transylvania, Romania, 13th century Castle Bran, associated with Vlad II the Impaler,
AKA Dracula. Queen Marie of Romanias later residence.
Image ID: 445665049
Copyright: Emily Marie Wilson
TABLE OF CONTENTS
Foreword ............................................................................................................. 4
1. Tourism Performance Summary 2016 ............................................................ 7
2. Global Tourism Forecast Summary .............................................................. 10
3. Recent Industry Performance ....................................................................... 11
3.1 Air Transport .......................................................................................... 11
3.2 Accommodation ..................................................................................... 15
4. Special Feature ............................................................................................. 17
5. Key Source Market Performance .................................................................. 21
5.1 Key Intra-European Markets .................................................................. 21
5.2 Non-European Markets .......................................................................... 25
6. Origin Market Share Analysis........................................................................ 28
6.1 United States.......................................................................................... 29
6.2 Canada ................................................................................................... 30
6.3 Mexico .................................................................................................... 31
6.4 Argentina ................................................................................................ 32
6.5 Brazil ...................................................................................................... 33
6.6 India ....................................................................................................... 34
6.7 China ...................................................................................................... 35
6.8 Japan ..................................................................................................... 36
6.9 Australia ................................................................................................. 37
6.10 United Arab Emirates ........................................................................... 38
6.11 Russia .................................................................................................. 39
7. Economic Outlook ......................................................................................... 40
7.1 Overview ................................................................................................ 40
7.2 Eurozone ................................................................................................ 43
7.3 United Kingdom...................................................................................... 44
7.4 United States.......................................................................................... 45
7.5 Japan ..................................................................................................... 46
7.6 Emerging Markets .................................................................................. 47
8. Appendix 1 .................................................................................................... 51
9. Appendix 2 .................................................................................................... 53
FOREWORD
STRONG GROWTH OVER THE SUMMER PERIOD
The earlier strong performance in Europe continued into the third quarter of
2016. Despite challenges including safety and security, most destinations
across the region shared in the good summer growth in visitor numbers.
According to UNWTO, Europe experienced a 3% increase in international
tourist arrivals compared to the first six months of 2015 1.
International tourist arrivals by destination
2016 year-to-date, % year
conditions. Low oil prices continue to result in lower air fares, and both factors
play a role in sustaining air travel demand.
1. TOURISM PERFORMANCE
SUMMARY 2016
The overwhelming majority of European destinations report continued growth in
tourism demand through the summer months. 33 destinations have now
submitted 2016 year-to-date data in some capacity, with most reporting data for
the peak months of July and August. 28 of these destinations have recorded
either positive arrivals or overnights growth so far in 2016. In most cases it is
both. By contrast Turkey, Belgium, Switzerland, Monaco, and Greece have all
reported a fall in either arrivals, overnights, or both so far in 2016.
The number of
European destinations
reporting growth in 2016 to
date
33 destinations have
reported on tourism
performance in 2016
Arrivals
Nights
25
15
5
-5
-15
-25
Iceland
Slovakia
Cyprus
Bulgaria
Portugal
Ireland Rep
Norway
Serbia
Spain
Romania
Slovenia
Lithuania
Poland
Croatia
Malta
Czech Rep
Estonia
Latvia
Montenegro
Netherlands
Austria
Sweden
Denmark
Hungary
Finland
UK
Germany
Luxembourg
Greece
Monaco
Switzerland
Belgium
Turkey
28
Many of the very high growth rates observed in some destinations earlier in the
year have now moderated, which is typical as data now include the more
important and less volatile summer months. This will likely continue over the
remainder of 2016, including further peak season months. Nonetheless, some
impressive growth rates remain.
-35
Source: TourMIS
Slovakias strong start to the year helped it retain position as Europes second
fastest growth market in the year-to-date. Growth has moderated from earlier in
the year when arrivals and overnights growth both exceeded 20%. Based on
data to August arrivals growth was 19.1% and overnights growth was 17.5%
and this should secure its status as a top performing destination in 2016. This
Following the UKs vote to leave the EU, the outlook for outbound travel
demand has been downgraded. This is in line with weaker near-term growth
prospects amid significant uncertainty as well as a fall in the value of the
pound. But weaker sterling means the UK is now a more price-attractive
destination and inbound travel should continue to thrive. This will mostly be
supported by leisure travel growth, while domestic UK travel should also benefit
due to these pricing effects.
Arrivals growth has been strong in Ireland, with growth reported as 12.3%
based on data to August. However, it shoulders a particularly large exposure to
Brexit fallout since the UK is its biggest European source market, albeit with
limited impact in 2016 to date. Since a holiday within the Eurozone became
approximately 10% more expensive when paid for in sterling following the
outcome of the referendum, Ireland will have lost some its appeal from a UK
standpoint. Additionally, a weaker pound will inevitably encourage some
displacement in travel from other source markets away from Ireland and
towards the UK.
The relative strength of the Swiss franc continues weighed on Switzerlands
performance in 2016 to date. Both arrivals and nights to Switzerland have fallen
by 2.1% and 2.5% respectively based on data to August. This marks an
acceleration in the rate of decline compared to arrivals growth to April and
compounds similar falls endured in 2015.
31.8%
Drop in tourist arrivals in
Turkey in the first eight
months of 2016.
Arrivals in Turkey fell 1.6% in
2015 as a whole and a larger
drop is likely this year.
Turkey reported lower arrivals from all monitored source markets based on
data to data to August as it continues to suffer from a combination of political
unrest, weakened relations with the large source market of Russia, and the
threat of terrorism.
Attacks in Turkeys came after threats by the same group which claimed
responsibility for attacks carried out in tourist resorts in Tunisia and Egypt and
in excess of 100 people have been killed as a result of these attacks in 2016
alone. This will only continue to discourage some tourists from visiting Turkey
and travel to Turkey for 2016 as a whole is looking likely to fall further following
a more modest drop in 2015. Russias temporary ban on travel to Turkey
following the shooting down of a Russian bomber will have had a large impact
given that Russia typically accounts for over 10% of arrivals to Turkey. Russian
arrivals accounted for around 75% of the fall in European travel to Turkey in
2015, with larger falls seen so far this year. But with the ban now lifted and the
restoration of relations between the two underway, this negative trend may be
reverse in 2017. However, international travel to Turkey in 2016 as a whole is
likely to be lower than in 2015 before recovery fully begins next year.
International Nights
% ytd
to m onth
% ytd
to m onth
Austria
5.1
Jan-Sep
4.9
Jan-Sep
Belgium
-13.9
Jan-Aug
-12.3
Jan-Aug
Bulgaria
13.2
Jan-Aug
Croatia
7.3
Jan-Aug
8.8
Jan-Aug
Cyprus
18.8
Jan-Sep
8.6
Jan-Jul
Czech Rep
6.5
Jan-Jun
4.1
Jan-Jun
4.9
Jan-Aug
Estonia
6.5
Jan-Aug
6.4
Jan-Aug
Finland
3.8
Jan-Aug
1.7
Jan-Aug
Germany
1.3
Jan-Aug
1.3
Jan-Aug
Greece
-1.6
Jan-Jun
Hungary
4.6
Jan-Aug
4.0
Jan-Aug
Iceland
33.9
Jan-Sep
Ireland Rep
12.0
Jan-Sep
Latvia
4.1
Jan-Jun
5.7
Jan-Jun
Lithuania
9.5
Jan-Jun
1.0
Jan-Aug
5.7
Jan-Aug
Denmark
Luxembourg
Malta
8.3
Jan-Aug
Montenegro
5.6
Jan-Aug
Netherlands
5.5
Jan-Jul
Monaco
Norw ay
-1.9
Jan-Sep
-2.6
Jan-Aug
5.6
Jan-Jul
11.7
Jan-Sep
Poland
6.8
Jan-Aug
9.2
Jan-Aug
Portugal
12.3
Jan-Aug
10.9
Jan-Aug
Romania
9.9
Jan-Aug
Serbia
11.1
Jan-Sep
11.7
Jan-Sep
Slovakia
19.1
Jan-Aug
17.5
Jan-Aug
Slovenia
9.7
Jan-Aug
8.3
Jan-Aug
Spain
10.1
Jan-Aug
10.1
Jan-Aug
5.1
Jan-Sep
-2.6
Jan-Aug
Sw eden
Sw itzerland
-2.1
Jan-Aug
Turkey
-31.8
Jan-Aug
3.0
Jan-Aug
UK
2015
2016
Outbound**
2017
2018
2014
2015
2016
2017
2018
World
4.1%
4.5%
3.8%
3.8%
4.6%
3.2%
4.7%
4.0%
4.0%
4.8%
Americas
North America
Caribbean
Central & South America
8.5%
9.7%
5.3%
6.8%
6.1%
5.6%
8.1%
6.5%
4.2%
3.6%
3.6%
6.4%
3.8%
3.8%
4.3%
3.7%
4.0%
4.0%
3.7%
4.2%
6.9%
8.3%
9.6%
1.7%
5.1%
4.4%
16.1%
6.8%
3.7%
4.8%
3.8%
-0.7%
4.6%
5.3%
2.8%
2.1%
4.0%
4.2%
3.9%
3.1%
Europe
ETC+4
EU
Non-EU
2.1%
4.4%
4.4%
-6.2%
4.7%
4.9%
5.5%
1.5%
1.9%
1.9%
3.9%
-6.4%
3.0%
2.6%
2.1%
7.1%
4.4%
4.1%
3.8%
6.9%
-0.2%
2.4%
2.0%
-8.9%
3.3%
5.5%
5.4%
-5.8%
1.8%
2.8%
2.8%
-2.8%
2.8%
2.5%
2.6%
3.7%
4.6%
4.4%
4.5%
5.2%
5.2%
2.2%
7.1%
-7.9%
1.9%
6.5%
3.9%
4.7%
5.2%
7.2%
5.1%
-0.5%
0.9%
5.2%
8.4%
3.5%
1.9%
2.7%
4.5%
2.4%
4.4%
3.8%
4.4%
5.0%
3.4%
5.2%
-1.2%
5.9%
-4.8%
6.4%
7.4%
3.3%
7.5%
-3.8%
7.7%
4.3%
1.2%
2.8%
-0.3%
5.8%
-0.6%
3.7%
3.1%
5.0%
4.9%
4.2%
4.7%
4.2%
5.1%
3.7%
5.2%
7.3%
2.8%
9.7%
6.1%
5.8%
4.3%
8.1%
3.5%
7.2%
8.8%
8.6%
9.2%
9.2%
9.0%
4.6%
4.2%
5.2%
4.3%
5.3%
4.9%
5.0%
4.8%
5.3%
4.3%
6.7%
8.0%
4.5%
13.8%
3.9%
7.8%
8.9%
6.4%
9.0%
4.0%
8.8%
10.2%
7.2%
5.4%
4.6%
5.4%
5.3%
6.0%
6.7%
4.7%
5.3%
5.4%
5.9%
6.2%
2.6%
Africa
2.1%
-4.7%
-2.6%
5.7%
6.2%
3.9%
1.8%
-0.2%
4.0%
4.1%
Mid East
8.0%
1.9%
3.6%
5.6%
6.1%
8.7%
1.4%
4.2%
7.3%
8.0%
Northern
Western
Southern/Mediterranean
Central/Eastern
- Central & Baltic
* Inbound is based on the sum of the country overnight tourist arrivals and includes intra-regional flows
** Outbound is based on the sum of visits to all destinations
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and Switzerland;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece,
Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia, and Ukraine;
Central & Baltic Europe is Bulgaria, Czech Repub lic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania,
and Slovakia;
ETC+4 is all ETC members plus France, the Netherlands, Sweden, and the United Kingdom
10
Passenger growth in 2016 to date has continued in line with the strong expansion
seen in 2015 worldwide.
European passenger growth has been maintained and the deterrent of further terror
attacks in Europe has eased but still weighs on growth from Asia.
A strong dollar helps bring travel growth from the Americas to Europe.
European hotel industry is exercising pricing power but tourists remain price
conscious.
5.8%
The rate of World RPK
growth in 2016 to date
YTD growth based on data
to August
In the year to August, World Revenue Passenger Kilometre (RPK) growth was
5.8%, slightly slower than earlier 2016 year-to-date growth but still comfortably
above the average annual growth rate over the past 10 years (5.2%). Growth
has been helped by low oil prices continuing to feed into reduced air fares.
RPK growth was strongest in the Middle East based on 2016 year-to-date data,
with many of its hubs benefitting as gateways between Asia, Europe, and the
Americas. Growth has exceeded that for 2015 as a whole and is despite some
weaker regional traffic related to the oil industry. However, capacity growth has
continued to outstrip that of demand and passenger load factors (PLF) have
declined in the year to August on some transcontinental routes via the Middle
East and some routes to and from the Middle East itself. As these hubs
continue to jostle for market share, by adding new routes, PLF may suffer
further.
Annual International Air Passenger Growth
2014
% year, RPK
14
2015
2016 ytd
12
10
8
6
4
2
0
Africa
Asia/Pacific
Europe
Latin
America
World
Source: IATA
11
Air passenger demand to and from Asia/Pacific has grown by 8.6% so far in
2016 based on data to August. The reported rate of RPK growth marks 2016 as
the fastest growth year of the past decade, excluding the post-recession
rebound in 2010 of 9%. Fears of slowing economic growth in China have eased
in recent months, with indicators from the services side of the economy
indicating that it is still expanding strongly. Household wealth and spending
continues to rise and is supporting international travel demand.
In Latin America year-to-date RPK growth has slowed to its lowest rate since
2009. Recessions in Venezuela and Argentina, coupled with the particular deep
recession in Brazil offset demand growth elsewhere in the Latin America region
and total regional growth will remain sluggish in 2016. Both business and
leisure-related travel are suffering and RPK growth is unlikely to surpass that of
2015 at any point this year. In the case of Brazil, the summers Olympic Games
in Rio de Janeiro may have provided temporary respite, while recoveries in
Venezuela and Argentina are currently a distant prospect.
Monthly International Air Passenger Growth
May-16
% year, RPK
14
Jun-16
Jul-16
12
Aug-16
10
8
6
4
2
0
Africa
Asia/Pacific
Europe
Latin
America
World
Source: IATA
In Europe, year-to-date RPK growth is also at its slowest since 2009 but growth
is still robust and has grown in all months of 2016 so far. Fear of further terrorist
attacks such as those seen Paris and Brussels are a likely cause of this as
some European destinations are perhaps being substituted for destinations
elsewhere.
12
Total
% year, RPK
20
3mth mav
15
10
5
0
-5
-10
aot-06
janv.-07
juin-07
nov.-07
avr.-08
sept.-08
fvr.-09
juil.-09
dc.-09
mai-10
oct.-10
mars-11
aot-11
janv.-12
juin-12
nov.-12
avr.-13
sept.-13
fvr.-14
juil.-14
dc.-14
mai-15
oct.-15
mars-16
aot-16
-15
Source: IATA
Data from the Association of European Airlines (AEA) confirmed that strong
growth in European airline capacity continued throughout the first quarter of
2016. Growth has averaged 4.5% so far in 2016 compared to 4.2% for the
same period in 2015. This remains in line with the trend in recent years and
continued capacity expansion at this rate is supportive of further demand
growth.
European Airlines Capacity
2014
2015
2016
12
10
8
6
4
2
0
-2
Q1
Q2
Q3
Q4
Source: AEA
Airline load factors have eased a little in recent months but remain high despite
this capacity growth. Oil prices have risen recently, but remain historically low
and continue to feed into lower air fares, in line with the usual lag period due to
price hedging, providing a further boost to demand. Average load factor for the
year-to-date is only marginally lower than for the same period in previous years
(78% compared to 80.9% in 2015 and 80.5% in 2014).
13
2014
2015
88
2016
86
84
82
80
78
76
74
72
70
Q1
Q2
Q3
Q4
Source: AEA
87%
Peak of European airline
passenger load factor in
2016 to date
Based on data to Q3
Asia
Total
15
10
5
0
-5
-10
Source: AEA
Air passenger flows between Europe and the Americas continued to grow at a
faster rate than total scheduled travel to and from Europe in 2016. The two
flows have also diverged to an unprecedented degree. The average difference
between them was 5.3pp for 2016 to date. This is a substantial premium
compared to the average difference in 2015 of 1.7pp. The greatest percentage
point difference observed in 2016 was 9.7. United States outbound travel to
Europe has been particularly strong due to the relative strength of the dollar
14
9.7pp
The gap between EuropeAmericas and total European
airline passenger growth in
2016
This is the biggest observed
pp difference in 2016
Americas
Total
20
15
10
5
0
-5
Source: AEA
3.2 ACCOMMODATION
Global accommodation sector performance remained mixed in the first nine
months of 2016. The worst performing region was the Middle East & Africa; all
three measures of Occupancy, ADR and revenue per available room (RevPAR)
showed a downturn compared to the first nine months of 2015. Meanwhile all
other regions boasted at least one positive performance measure although in
Europes case this was just occupancy.
Global Hotel Performance
Occ
ADR ()
RevPAR ()
2
0
-2
-4
-6
-8
-10
Asia/Pacific
Americas
Europe
Middle East/Africa
15
RevPAR also fell the only global region for which this was the case. This
modest demand and price cutting is consistent with some weakening
economies and softer travel demand from Asian markets.
In the Americas, room rates continued to rise in US dollar terms (2.3%) but this
continued to be entirely buoyed by North American performance; ADR in other
regions of the Americas fell over the same period. North American hotel
occupancy was unchanged from 2015 levels, allowing hotels to continue to
exercise pricing power and raise rates, indicating a degree of optimism
regarding future growth. However, across the rest of the Americas occupancy
rates were down with large falls in the Caribbean and South America. South
Americas accommodation sector in particular continued to feel the pinch of
recessions.
0.2%
The rate of occupancy
growth in Europe in 2016
Based on 2016 year-to-date
data to September
16
4. SPECIAL FEATURE
THE IMPACTS OF BREXIT ON EUROPEAN TOURISM
1.4%
UK GDP growth in 2017 as
recession should be avoided
Slower growth is due to
weaker investment with
heightened uncertainty
The UK voted to leave the EU in the referendum held on 23rd June with
significant and far-reaching implications for a wide range of business activities,
including tourism. A previous special feature (in the Q1/2016 report) considered
the potential impacts of a UK vote to leave on economic growth. This feature
updates that prior analysis and describes potential impacts on tourism across
Europe.
Since the so-called Brexit vote, the economic outlook for the UK has
deteriorated, although recession still appears unlikely. Following some initial
gloomy data releases and surveys, the UK economy has enjoyed some good
news with continued growth reported in output and spending. But this growth is
slower than the trend earlier in the year and Oxford Economics current
baseline expectation of 1.4% GDP growth in 2017 is consistent with prior
scenarios of Brexit.
Business investment is set to drop over the next year and will be the largest
drag on the economy in coming years. Large businesses are unwilling to spend
due to the uncertainty surrounding the UKs future relationship with the EU.
Political announcements had removed some of the uncertainty surrounding the
timing of the UKs formal exit from the EU and the future relationship, but the
high court ruling that this is subject to parliamentary approval adds further
confusion. A deadline of the end of March 2017 has been set by the
Government for triggering Article 50 of the Lisbon Treaty which begins the
formal process of leaving the EU and the start of official negotiations. This
would begin a two-year negotiating period and the UK will therefore no longer
be part of the EU by early 2019. But greater parliamentary approval and input
may affect this timing and also the goals of negotiations.
Exchange Rate: Sterling vs Euro
1 =
1.5
New baseline
1.4
Pre-Brexit baseline
1.4
1.3
1.3
1.2
1.2
1.1
1.1
1.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Government statements have clarified that a key point for the UK in any future
relationship will be control over immigration. This stance is incompatible with
17
1.15
Expected value of sterling for
2017 on average
15% weaker value than preBrexit vote expectations
-5
70
80
-15
90
-20
100
-25
2000
110
2002
2004
2006
2008
2010
2012
2014
2016
2018
-8.1%
-7.9%
-7.8%
-7.8%
-7.7%
-7.3%
-7.0%
-6.5%
-6.5%
-6.2%
-6.1%
-5.9%
-5.5%
-4.9%
-4.8%
-4.8%
-4.8%
-4.6%
-4.6%
-9%
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
Typical relationships between exchange rates and travel demand show that
long-haul travel demand is more price sensitive than short-haul travel. Hence,
UK travel to longer-haul destinations will see more of an impact. In fact some
UK travellers may switch away from more expensive long-haul trips with a
relative benefit to less expensive alternative destinations within the region.
The overall impact for European impacts is likely to be for slower growth from
the UK and potential declines at least in the short-term. Exposure to the UK
market will determine the extent to which this will affect the market as a whole.
Many short-haul destinations are more heavily reliant on the UK as a source
market, in which case the overall impact on performance will be larger.
However, looking at a city destination level, there are some large long-haul
market with high exposure to the UK market.
All impacts, are of course, uncertain given the ongoing developments in the
political relationships. As well as the economic uncertainty the precise outcome
of the negotiated relationship between UK and the EU will be important in
several areas. For example, UK currently benefits from high air access as all
19
EU carriers can freely operate across borders. Any reduction in air capacity
from a new agreement could directly increase travel costs2.
% share of
international
arrivals
Berlin
Bangkok
Rome
Istanbul
Cracow
Barcelona
Las Vegas, NV
Warsaw
Antalya
Dubai
Orlando, FL
Amsterdam
Paris
New York, NY
Dublin
11%
3%
8%
5%
23%
10%
12%
18%
7%
8%
16%
18%
10%
9%
30%
0
200
400
600
800
1,000
1,200
1,400
http://www.oxera.com/Latest-Thinking/Publications/Reports/2016/How-could-Brexit-affect-the-transport-sector.aspx
20
Intra-European travel remains crucial for future growth while US travel demand
continues to grow helped by a strong dollar.
Trends discussed in this section in some cases relate to the first nine months of the year although
actual coverage varies by destination. For the majority of countries July or August will be the latest
available data point. Further detailed monthly data for origin and destination, including absolute
values, can be obtained from TourMIS, http://tourmis.info.
5.1 KEY INTRA-EUROPEAN MARKETS
out of 32 destinations
reported growth from
Germany pointing to
continued intra-regional
growth in 2016
Arrivals
Nights
20
15
10
5
0
-5
-10
-15
Iceland
Bulgaria
Norway
Estonia
Portugal
Slovakia
Monaco
Latvia
Czech Rep
Poland
Croatia
Malta
Austria
Cyprus
Lithuania
Spain
Slovenia
Denmark
Netherlands
Ireland Rep
Sweden
Romania
Serbia
Finland
Greece
Montenegro
UK
Luxembourg
Switzerland
Hungary
Belgium
Turkey
26
The vast majority of European destination markets have reported growth from
Germany so far in 2016 compared to the same period of 2015. Iceland boasted
the strongest growth in arrivals from Germany: 22.7% higher based on data to
September compared to the same period in 2015. Bulgaria has also enjoyed
strong growth from Germany (+19.2%). German tourists typically comprise over
10% of all arrivals to Bulgaria, hence growth of this magnitude represents a
substantial number of new arrivals. Travel to Belgium and Turkey has fallen
sharply as travellers are deterred from both destinations in the aftermath of
terror attacks.
-20
Source: TourMIS
21
Montenegro has enjoyed strong arrivals growth of 55.7% from the Netherlands
in 2016 to date as well as strong overnights growth (+34.3%), both based on
data to August. Iceland has also reported robust growth from the Netherlands
based on data to September which showed the number of Dutch arrivals to be
up 24.5% compared to the same period in 2015.
Arrivals from the Netherlands to the UK have grown strongly based on data to
June, and this growth will potentially be bolstered by the weaker pound in the
second half of 2016.
Dutch visits and overnights to select destinations
2016 year-to-date*, % change year ago
25
Arrivals
Nights
15
-5
-15
Montenegro
Iceland
Norway
Estonia
Bulgaria
Lithuania
Slovakia
Portugal
Spain
Malta
UK
Denmark
Finland
Czech Rep
Austria
Slovenia
Greece
Croatia
Romania
Hungary
Serbia
Luxembourg
Poland
Switzerland
Germany
Sweden
Monaco
Cyprus
Belgium
Latvia
Turkey
-25
Source: TourMIS
Some of the caution that existed at the beginning of the year appears to have
dissipated and the majority of destinations are now reporting some growth from
France, returning to more normal trends. Lithuania, Iceland, and Norway in
particular have reported strong growth from France. The UK is one of the few
destinations which reported falling arrivals from France based on data to June,
6% lower than the same period in 2015. As data relevant to the weaker pound
becomes available we would expect to see a return to growth.
French visits and overnights to select destinations
Arrivals
Nights
30
25
20
15
10
5
0
-5
-10
Lithuania
Iceland
Norway
Cyprus
Slovakia
Bulgaria
Portugal
Estonia
Denmark
Croatia
Spain
Finland
Slovenia
Ireland Rep
Malta
Poland
Romania
Montenegro
Luxembourg
Germany
Monaco
Netherlands
Latvia
Serbia
Switzerland
Czech Rep
Austria
Hungary
Sweden
UK
Belgium
Greece
Turkey
Source: TourMIS
22
Iceland was the favoured destination of Italians in arrivals growth terms based
on data to September, closely followed by Denmark and Slovakia based on
data to August. The UK and Estonia also reported strong growth from Italy
based on data to June and August respectively. The UK could see this growth
accelerate in the second half of the year thanks to a weaker pound. However, a
large minority of destinations report some falling demand from Italy in the year
to date, and growth prospects remain subdued.
Italian visits and overnights to select destinations
Arrivals
Nights
25
Belgium, -31.4% (N) & -31.5% (A)
Turkey, -57.7% (A)
20
15
10
5
-5
-10
Iceland
Denmark
Slovakia
UK
Estonia
Luxembourg
Portugal
Ireland Rep
Monaco
Romania
Poland
Finland
Cyprus
Slovenia
Spain
Montenegro
Malta
Latvia
Serbia
Bulgaria
Croatia
Greece
Switzerland
Netherlands
Austria
Hungary
Sweden
Czech Rep
Germany
Lithuania
Belgium
Turkey
Source: TourMIS
23
Arrivals
Nights
25
Turkey, -30.9% (A)
15
-5
-15
-25
Latvia
Iceland
Croatia
Slovakia
Montenegro
Denmark
Spain
Portugal
Ireland Rep
Greece
Slovenia
Sweden
Romania
Cyprus
Poland
Serbia
Netherlands
Czech Rep
Hungary
Norway
Lithuania
Malta
Austria
Estonia
Switzerland
Germany
Luxembourg
Bulgaria
Finland
Monaco
Belgium
Turkey
Source: TourMIS
out of 32 destinations
reported falling arrivals or
overnights from Russia. The
most sizeable falls were
observed in Turkey.
Turkey has endured the largest decline in Russian arrivals so far in 2016, down
87.9% based on data to August, even weaker than the 67.7% decline reported
earlier in the year based on data to April. Relations between the two have been
fragile since the Turkish Air Force shot down a Russian fighter jet on the
Syrian-Turkey border in November 2015. Russia had imposed (but has since
lifted) travel restrictions on Russian tourists visiting Turkey, and, notable efforts
have been made to restore relations between the two countries. Some
improvement in tourism performance may follow in 2017, but Russians will still
share the same safety concerns of other European markets regarding travel to
Turkey and any growth is unlikely to immediately offset these falls.
Cyprus, Iceland, and Slovakia all reported strong arrivals growth from Russia.
In Cyprus, arrivals growth was in double-digit territory (+44.5%) based on data
to September. But this includes some rebound from falls in prior years and
potentially some substitution from travel which would ordinarily have been
bound for Turkey.
Russian visits and overnights to select destinations
Arrivals
Nights
20
10
0
-10
-20
Cyprus
Iceland
Slovakia
Bulgaria
Greece
Spain
Montenegro
Latvia
Croatia
Romania
Serbia
Estonia
Norway
Lithuania
Luxembourg
Poland
Slovenia
Portugal
Monaco
Hungary
UK
Denmark
Switzerland
Czech Rep
Finland
Germany
Netherlands
Austria
Sweden
Belgium
Malta
Turkey
20
-30
Source: TourMIS
24
Arrivals
Nights
25
15
-5
-15
Iceland
Latvia
Portugal
Norway
Slovakia
Serbia
Malta
Poland
Netherlands
Finland
Montenegro
Slovenia
Spain
Croatia
Denmark
Estonia
Romania
Greece
Switzerland
Germany
Sweden
Lithuania
Hungary
Czech Rep
UK
Austria
Bulgaria
Monaco
Cyprus
Luxembourg
Belgium
Turkey
-25
Source: TourMIS
Arrivals
Nights
20
10
-10
-20
Montenegro
Iceland
Poland
Slovakia
Bulgaria
UK
Portugal
Latvia
Norway
Lithuania
Sweden
Estonia
Denmark
Finland
Cyprus
Serbia
Spain
Monaco
Switzerland
Austria
Czech Rep
Hungary
Germany
Slovenia
Croatia
Luxembourg
Netherlands
Romania
Belgium
Turkey
-30
Source: TourMIS
Arrivals
Nights
40
30
20
10
-10
-20
Slovakia
Norway
Hungary
Serbia
Latvia
Iceland
Poland
Sweden
Finland
Spain
Slovenia
Bulgaria
Portugal
Czech Rep
Romania
Estonia
Croatia
Lithuania
Austria
Denmark
Germany
Cyprus
Montenegro
Netherlands
UK
Luxembourg
Switzerland
Monaco
Belgium
Greece
Turkey
Source: TourMIS
All but six reporting destinations enjoyed arrivals growth from India. Three of
these are familiar in the form of Turkey, Belgium, and the UK. Croatia was the
most popular Indian growth destination with arrivals 78.6% higher and
overnights 68.8% higher in 2016 than 2015 based on data to August. This
growth across the majority of destinations has been aided by a strong
26
Arrivals
Nights
40
30
20
10
Source: TourMIS
Turkey
Belgium
UK
Monaco
Switzerland
Montenegro
Sweden
Germany
Finland
Czech Rep
Denmark
Hungary
Austria
Bulgaria
Poland
Romania
Slovakia
Netherlands
Latvia
-10
Croatia
Many destinations have reported sizeable arrivals and overnights growth from
Canada so far in 2016. Travel to Iceland was strong to September (+62.1%),
aided by its hub status on transatlantic flights. Continued growth in scheduled
seats on flights between Iceland and Canada and onward to European
destinations will facilitate further growth. Strong growth to Finland is skewed by
substantial flows in January when Finland hosted the Ice Hockey World Junior
Championships with reported arrivals growth of 175% and overnights growth of
701% compared to January 2015. This has since abated to more typical rates.
Spain was also the recipient of some very strong arrivals growth from Canada
(45.9% based on data to August), albeit from a very small base. It is possible
that along with Spain is benefitting from some displaced travel which may have
otherwise been bound for France if not for recent terrorist activity.
Canadian visits and overnights to select destinations
Arrivals
Nights
40
30
20
10
-10
-20
Iceland
Finland
Spain
Slovakia
Poland
Croatia
Portugal
Romania
Serbia
Slovenia
Montenegro
Lithuania
Denmark
Sweden
Hungary
Monaco
Netherlands
Czech Rep
Austria
Switzerland
Germany
Greece
Bulgaria
Latvia
Cyprus
Belgium
Turkey
Source: TourMIS
27
28
Growth (2016-21)
Level
Share**
105,002
Annual
average
4.5%
62,358
59.4%
5.3%
42,644
40.6%
3.3%
27,446
26.1%
6,648
Growth (2011-16)
Cumulative
growth*
24.6%
Cumulative
growth*
36.1%
29.4%
61.7%
32.4%
61.0%
17.6%
38.3%
41.9%
39.0%
5.5%
30.4%
27.4%
32.9%
26.8%
6.3%
5.8%
32.6%
6.7%
34.8%
6.4%
9,368
8.9%
4.3%
23.2%
8.8%
19.5%
10.2%
7,786
7.4%
5.4%
29.9%
7.7%
44.7%
7.0%
3,645
3.5%
7.9%
46.4%
4.1%
45.7%
3.2%
Share 2021**
Share 2011**
-
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Northern Europe
Western Europe
Southern Europe
2012
2014
2016
2018
2020
29
6.2 CANADA
Canada Market Share Summary
2016
Grow th (2016-21)
Level
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
32,609
4.1%
22.2%
-0.8%
12,588
38.6%
3.2%
17.0%
37.0%
16.9%
32.8%
20,021
61.4%
4.6%
25.4%
63.0%
-9.4%
67.2%
4,866
14.9%
2.6%
13.6%
13.9%
17.5%
12.6%
1,136
3.5%
5.9%
33.4%
3.8%
12.7%
3.1%
1,656
5.1%
2.4%
12.8%
4.7%
7.9%
4.7%
1,778
5.5%
0.8%
4.0%
4.6%
31.8%
4.1%
296
0.9%
-0.2%
-1.2%
0.7%
17.7%
0.8%
Grow th (2011-16)
Southern Europe
Northern Europe
Central/Eastern Europe
Western Europe
10.000
8.000
6.000
4.000
2.000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Northern Europe
Western Europe
Southern Europe
Central/Eastern Europe
2012
2014
2016
2018
2020
30
6.3 MEXICO
Mexico Market Share Summary
2016
Grow th (2016-21)
Level
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
21,696
3.4%
18.0%
37.9%
2,776
12.8%
4.1%
22.0%
13.2%
38.9%
12.7%
18,920
87.2%
3.3%
17.4%
86.8%
37.8%
87.3%
1,423
6.6%
3.4%
18.1%
6.6%
20.1%
7.5%
105
0.5%
2.5%
13.2%
0.5%
27.8%
0.5%
601
2.8%
4.8%
26.5%
3.0%
-2.8%
3.9%
557
2.6%
2.2%
11.4%
2.4%
43.3%
2.5%
160
0.7%
2.5%
13.0%
0.7%
66.4%
0.6%
Grow th (2011-16)
2.000
1.500
1.000
500
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
31
6.4 ARGENTINA
Argentina Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
10,517
3.0%
16.1%
52.5%
2,971
28.3%
5.4%
30.2%
31.7%
54.9%
27.8%
7,545
71.7%
2.0%
10.6%
68.3%
51.6%
72.2%
1,165
11.1%
5.1%
28.3%
12.2%
78.0%
9.5%
138
1.3%
9.4%
56.6%
1.8%
80.3%
1.1%
58
0.5%
6.8%
39.0%
0.7%
54.6%
0.5%
841
8.0%
3.1%
16.2%
8.0%
79.5%
6.8%
129
1.2%
11.4%
71.8%
1.8%
77.6%
1.1%
1.500
1.000
500
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
32
6.5 BRAZIL
Brazil Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
8,006
4.2%
22.9%
-2.8%
5,691
71.1%
4.6%
25.0%
72.3%
-0.1%
69.1%
2,316
28.9%
3.3%
17.6%
27.7%
-9.0%
30.9%
2,747
34.3%
2.0%
10.2%
30.8%
-11.9%
37.8%
233
2.9%
7.8%
45.8%
3.5%
-15.5%
3.3%
1,119
14.0%
3.3%
17.9%
13.4%
-18.8%
16.7%
1,158
14.5%
-1.5%
-7.2%
10.9%
-3.3%
14.5%
238
3.0%
4.3%
23.6%
3.0%
-11.2%
3.2%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
33
6.6 INDIA
India Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
15,648
7.2%
41.8%
46.5%
15,023
96.0%
7.2%
41.5%
95.8%
48.2%
94.9%
624
4.0%
8.4%
49.9%
4.2%
13.8%
5.1%
2,385
15.2%
9.0%
53.9%
16.5%
41.7%
15.7%
446
2.8%
8.3%
48.7%
3.0%
18.1%
3.5%
811
5.2%
8.2%
48.5%
5.4%
31.7%
5.8%
325
2.1%
9.6%
58.4%
2.3%
27.8%
2.4%
803
5.1%
9.9%
60.5%
5.8%
84.7%
4.1%
Central/Eastern Europe
Western Europe
10.000
8.000
6.000
4.000
2.000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
34
6.7 CHINA
China Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
86,940
5.7%
31.9%
113.6%
39,862
45.8%
7.0%
40.1%
48.7%
179.8%
35.0%
47,079
54.2%
4.5%
24.9%
51.3%
78.0%
65.0%
10,552
12.1%
9.4%
56.7%
14.4%
109.5%
12.4%
881
1.0%
7.9%
46.1%
1.1%
127.0%
1.0%
5,308
6.1%
10.7%
66.3%
7.7%
112.3%
6.1%
688
0.8%
8.6%
50.9%
0.9%
90.9%
0.9%
3,675
4.2%
7.9%
46.5%
4.7%
105.4%
4.4%
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
35
6.8 JAPAN
Japan Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
22,600
5.7%
31.7%
2.6%
14,825
65.6%
6.2%
35.1%
67.3%
18.2%
56.9%
7,776
34.4%
4.6%
25.2%
32.7%
-18.1%
43.1%
4,595
20.3%
6.8%
38.7%
21.4%
11.5%
18.7%
573
2.5%
3.8%
20.8%
2.3%
12.7%
2.3%
1,934
8.6%
8.8%
52.4%
9.9%
-1.8%
8.9%
1,419
6.3%
5.7%
31.9%
6.3%
29.5%
5.0%
669
3.0%
5.3%
29.2%
2.9%
21.9%
2.5%
16.000
Central/Eastern Europe
Western Europe
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Northern Europe
Western Europe
Southern Europe
Central/Eastern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2006
2008
2010
2012
2014
2016
2018
2020
36
6.9 AUSTRALIA
Australia Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
16,740
3.9%
21.0%
19.0%
16,081
96.1%
3.9%
20.9%
96.0%
18.1%
96.8%
659
3.9%
4.2%
22.7%
4.0%
47.8%
3.2%
5,371
32.1%
4.0%
21.7%
32.3%
16.2%
32.8%
1,463
8.7%
6.7%
38.5%
10.0%
11.0%
9.4%
1,714
10.2%
0.4%
2.2%
8.6%
0.6%
12.1%
1,701
10.2%
4.8%
26.2%
10.6%
35.5%
8.9%
494
2.9%
4.4%
23.9%
3.0%
43.3%
2.4%
Central/Eastern Europe
Western Europe
12.000
10.000
8.000
6.000
4.000
2.000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Northern Europe
Western Europe
Southern Europe
Central/Eastern Europe
12%
10%
8%
6%
4%
2%
0%
2006
2008
2010
2012
2014
2016
2018
2020
37
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
3,700
4.7%
25.9%
28.9%
1,770
47.8%
1.1%
5.7%
40.2%
52.8%
40.4%
1,930
52.2%
7.6%
44.3%
59.8%
12.8%
59.6%
1,067
28.8%
1.0%
5.0%
24.1%
61.1%
23.1%
375
10.1%
1.5%
7.6%
8.7%
56.1%
8.4%
430
11.6%
-0.9%
-4.4%
8.8%
51.6%
9.9%
197
5.3%
1.1%
5.9%
4.5%
79.9%
3.8%
65
1.8%
8.3%
49.3%
2.1%
125.5%
1.0%
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
38
6.11 RUSSIA
Russia Market Share Summary
Grow th (2016-21)
2016
Level
Total outbound travel (000s)
Grow th (2011-16)
Share**
Annual
average
Cum ulative
grow th*
Share 2021**
Cum ulative
grow th*
Share 2011**
18,975
9.7%
58.6%
-38.4%
5,022
26.5%
8.0%
46.8%
24.5%
-17.6%
19.8%
13,953
73.5%
10.2%
62.8%
75.5%
-43.5%
80.2%
13,953
73.5%
10.2%
62.8%
75.5%
-43.5%
80.2%
1,047
5.5%
8.9%
53.5%
5.3%
-35.6%
5.3%
1,345
7.1%
7.3%
42.0%
6.3%
-19.1%
5.4%
4,296
22.6%
10.1%
61.6%
23.1%
-35.5%
21.6%
7,265
38.3%
11.0%
68.7%
40.7%
-50.8%
47.9%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008
2010
2012
2014
2016
2018
2020
39
7. ECONOMIC OUTLOOK
Assessing recent tourism data and industry performance is a useful way of directly monitoring
the key trends for travel demand across Europe. This can be complemented by looking at key
trends and relationships in macroeconomic performance in Europes key source markets
which can provide further useful insight into likely tourism developments throughout the year.
The linkages between macro and tourism performance can be very informative. For example,
strong GDP or consumer spending growth is an indication of rising prosperity with people more
likely to avail of international travel. It is also an indication of rising business activity and
therefore stronger business travel. Movements in exchange rates against the euro can be
equally important as it can influence choice of destination. For example, if the euro appreciated
(gained value) against the US dollar, the Eurozone would become a more expensive
destination and therefore potentially less attractive for US visitors. Conversely, depreciation of
the euro against the US dollar would make the Eurozone a relatively cheaper destination and
therefore more attractive to US travellers.
7.1 OVERVIEW
GLOBAL REVISIONS TO POTENTIAL GROWTH
Oxford Economics world GDP growth forecasts are currently at 2.2% for 2016,
which would be the lowest since 2009, and 2.6% in 2017.
Short-term activity indicators have been mixed. The global PMI rose to an
eight-month high in September, but growth remains subdued compared with its
long-term average. In addition, other high-frequency data such as the Citigroup
economic surprise indices have been trending down since August.
G10
Emerging markets
UK
80
60
40
20
0
-20
-40
-60
Jan-16
Mar-16
May-16
Jul-16
Sep-16
40
The forecast for GDP growth in the US in 2017 as been lowered from 2.3% to
2% given weaker momentum in the private sector, particularly consumption and
investment.
Activity in the UK continues to surprise to the upside, therefore supporting our
above-consensus call on UK growth (1.9% this year and 1.2% in 2017). But
sterling is bearing the brunt of the adjustment, falling to new lows against most
major currencies. This has led us to revise our end-year GBP forecasts to 1.25
to the US$ and 1.12 to the euro (from 1.28 and 1.19 last month).
Long-term forecasts have been reviewed and a weaker outlook for capital
accumulation and productivity growth means the Eurozone and the UK have
seen their potential growth cut by 0.2% a year over the next decade.
Lower growth in the Eurozone and the UK has consequences for interest rates
as well. We now do not expect the ECB to start raising the refinancing rate
until early-2020, and see it peaking at 2.75% in 2028 (versus 3% in 2025
previously). In the UK, the BoE terminal rate has been cut to 3.5% (from
3.75%). Also, our expected path for 10-year bond yields has flattened
significantly in most Eurozone countries.
In Japan, Abes policies should alleviate the worst of the demographics
slowdown, but this still results in potential growth of only 0.4% a year. This shift
away from monetary policy means that we now see yields on 10-year Japanese
bonds capped at 0% until 2020.
41
2016
GDP
Consumer
expenditure
Unemployment *
Exchange
rate***
Inflation
GDP
Consumer
expenditure
Unemployment **
Exchange
rate***
Inflation
UK
2.1%
2.8%
-0.1%
-11.6%
0.7%
1.4%
1.2%
0.2%
-5.9%
2.7%
France
1.3%
1.6%
-0.3%
0.0%
0.2%
1.5%
1.5%
-0.2%
0.0%
1.3%
Germany
1.8%
1.4%
-0.3%
0.0%
0.5%
1.5%
1.2%
-0.2%
0.0%
1.8%
Netherlands
1.6%
1.3%
-1.2%
0.0%
0.4%
1.5%
1.3%
-0.3%
0.0%
1.6%
Country
Italy
0.8%
1.2%
-0.5%
0.0%
0.1%
0.9%
0.7%
-0.1%
0.0%
1.5%
Russia
-0.7%
-3.8%
0.0%
-9.6%
7.2%
1.2%
-0.3%
0.2%
11.1%
5.4%
US
1.5%
2.7%
-0.4%
-0.5%
1.1%
2.0%
2.5%
-0.2%
2.3%
2.0%
Canada
1.2%
2.2%
0.2%
-3.8%
1.5%
1.8%
1.7%
0.1%
2.7%
1.8%
Brazil
-3.2%
-4.4%
3.2%
-4.8%
8.9%
1.0%
0.2%
1.1%
6.8%
5.4%
China
6.7%
7.5%
0.0%
-5.7%
1.9%
6.4%
6.9%
0.0%
-1.9%
2.1%
Japan
0.6%
0.5%
-0.3%
12.6%
-0.2%
0.6%
1.1%
-0.3%
3.3%
0.2%
India
7.5%
7.8%
-0.1%
-4.9%
5.3%
7.2%
7.5%
0.0%
2.2%
5.3%
42
7.2 EUROZONE
We continue to think that the Eurozone economy will fare pretty well in H2 this
year and is on track to perform better than the consensus in 2017.
Recent data has been something of a mixed bag for the region. Strikingly, the
composite PMI fell in September to its lowest level since the onset of QE, but it
still does not point to a marked slowdown in GDP growth in Q3. We also think
that the recent weakness may be caused by some volatility in the German data
and may thus overstate the degree to which service sector growth has
weakened. By contrast, the ECs Economic Sentiment Indicator has picked up
and on balance the hard data suggests that GDP growth probably improved a
touch in Q3.
Index
70
65
GDP (RHS)
Composite PMI (LHS)
1.5
60
1.0
55
0.5
50
0.0
45
-0.5
40
-1.0
35
-1.5
30
2004
-2.0
2006
2008
2010
2012
2014
2016
For now, then, there is little reason to alter our above-consensus growth
assessment for the near term. We still expect GDP growth to slow only slightly,
from 1.6% this year to 1.5% in 2017. But looking ahead, we have become more
pessimistic about the growth outlook, reflecting the expectation that total factor
productivity growth will remain subdued. We now think that Eurozone potential
GDP growth is probably only around 1%. As a result, we forecast growth will be
about 1.4% in 2018-19 and then tail off thereafter.
We expect weaker potential growth to result in a slower normalization of official
interest rates and government bond yields. We now do not expect the policy
rate to be raised until 2020. Even so, in the shorter term we think the ECB will
be forced to raise its inflation forecasts in December. We expect this revision,
plus the reasonably solid growth outlook, to result in the ECB announcing a
tapering of QE monthly asset purchases from March 2017, rather than a
continuation of monthly purchases of 80bn, which would be consistent with
recent comments from ECB insiders.
43
Business
investment
15
Forecast
10
5
0
-5
GDP
-10
-15
-20
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: Oxford Economics
Though the economic data has held up better than the MPC had expected, the
minutes of the September policy meeting suggested that this had not altered its
bigger-picture view of the economy post-referendum. As such, the majority of
members still expect to vote for another rate cut before the end of the year.
Typically, the MPC would move in a month in which there was an Inflation
Report, which would point to a rate cut in November, but it may wait until the
mid-December meeting to see whether the Chancellor implements a loosening
of fiscal policy in the Autumn Statement due late November.
At the Conservative Party conference, Prime Minister Theresa May confirmed
that she plans to trigger Article 50 of the Lisbon Treaty before the end of March
2017. This will start a two-year period of negotiations with the EU, with Brexit
finally occurring during Q1 2019. Commentary from the government suggests
that it is very likely that the UK will leave the customs union in order to be able
to negotiate free trade agreements (FTAs) with third countries and to regain
control over immigration policy. This would mean that the government would
either attempt to agree an FTA with the EU or marginally more likely in our
opinion it would revert to trading with the EU according to WTO rules.
44
45
7.5 JAPAN
At Septembers highly anticipated monetary policy meeting the Bank of Japan
(BoJ) announced that it was abandoning its monetary base target and replacing
it with targets for government bond yields. It also announced a commitment to
overshoot the 2% inflation target to boost inflation expectations.
However, at least in the short term, the latest announcements held little in the
way of new stimulus. The BoJ maintained its negative interest rate of -0.1% on
bank reserves held at the BoJ while stating that it will conduct asset purchases
broadly in line with the current pace of 80 trillion per year, albeit with some
flexibility based on the target of keeping the 10-year JGB yield around 0%. For
now, the BoJ can focus on changing the composition of the maturity of JGBs
without changing the average level of assets purchased. But in the future we
expect the BoJ will increase its average JGB holdings from around 65% of
GDP currently to above 80% next year to achieve its targets.
Despite further action expected by the BoJ, the yen is likely to stay relatively
close to current levels during the rest of this year and is forecast to weaken to
only 110 by mid-2018. The relatively strong yen further clouds the outlook for
exports and overall growth.
Indeed, while the final estimate for Q2 GDP growth was raised to 0.2% q/q from
the initial estimate of zero, export volumes still fell 1.5% on the quarter and
private non-residential investment also contracted, highlighting how the recent
strength in the yen is already affecting exporters and businesses in general.
F'cast
80
90
100
110
120
130
140
2005
2007
2009
2011
2013
2015
2017
2019
However, while exports and business investment are expected to contract both
this year and in 2017, the recently approved fiscal stimulus package will
provide a boost to overall economic growth through a mixture of infrastructure
spending and cash handouts.
The impact of the fiscal stimulus will partly offset the relatively strong yen profile
and coupled with the stronger Q2 outcome, GDP is now forecast to grow by
0.6% pa in both 2016 and 2017, up marginally from September, followed by a
pick-up to 0.8% in 2018.
46
18
14
12
10
8
6
4
2
0
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
47
%
9.0
Food CPI
16
8.5
14
Repo rate
(RHS)
12
8.0
10
7.5
CPI
8
6
7.0
RBI's inflation
target
6.5
2
0
2012
6.0
2013
2014
2015
2016
That said, the MPCs approach to policy setting appears to be more tactical and
data-dependent than the big picture approach taken by former Governor
Rajan. Hence, it is possible that the committee is less fixated on the 5% CPI
target for early 2017, and anchoring real rates around 2%, as long as inflation
is fairly close to the target. Thus, further easing cannot be ruled out even if
inflation averages 5.35% in Q1 2017, which is our baseline case.
18
Forecast
16
CPI inflation
14
12
10
Policy rate
8
6
4
Inflation target
2
0
2006
2008
2010
2012
2014
2016
2018
48
Further west in the CEE region, we have pushed back the beginning of policy
normalisation to late 2019-early 2020 in Hungary and the Czech Republic to
reflect a change in view on the timing of ECB policy normalisation. Moreover, in
Hungary, the surge in the forint following S&Ps recent rating upgrade will likely
lead to policy easing. Meanwhile, the Polish and Romanian central banks are
expected to tighten policy in H2 2018 and early 2017 respectively over fears
that fiscal easing will put upward pressure on inflation.
Forecast
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2010
Brazil
2011
2012
2013
Mexico
2014
2015
2016
2017
49
4
2
2013
2014
2015
2016
50
8. APPENDIX 1
GLOSSARY OF COMMONLY USED TERMS AND ABBREVIATIONS
Airline industry indicators
ASK Available Seat Kilometers. Indicator of airline supply, available seats x kilometers flown;
PLF Passenger Load Factor. Indicator of airline capacity. Equal to revenue passenger
kilometers (RPK) / available seat kilometers (ASK);
RPK Revenue Passenger Kilometers. Indicator of airline demand, paying passenger x
kilometers flown;
3mth mav Three month moving average.
Central Banks
BoE Bank of England;
MPC Monetary Policy Committee of BoE;
BoJ Bank of Japan;
ECB European Central Bank;
Fed Federal Reserve (US);
RBI Reserve Bank of India;
OBR Office for Budget Responsibility;
PBoC Peoples Bank of China.
51
CPI Consumer Price Index. Measure of price inflation for consumer goods;
FDI Foreign Direct Investment. Investment form one country into another, usually by
companies rather than governments;
GDP Gross Domestic Product. The value of goods and services produced in a given
economy;
LCU Local Currency Unit. The national unit of currency of a given country, e.g., pound, euro,
etc.;
PMI Purchasing Managers Index. Indicator of producers sentiment and the direction of the
economy;
PPI Purchase Price Index. Measure of inflation of input prices to producers of goods and
services;
PPP Purchasing Power Parity. An implicit exchange rate which equalises the price of
identical goods and services in different countries so they can be expressed with a common
price;
QE Quantitative Easing. Expansionary monetary policy pursued by central banks involving
asset purchases to reduce bond yields and increase liquidity in capital markets;
G7 Group of seven industrialised countries comprising the United States, the United
Kingdom, France, Germany, Italy, Canada, and Japan.
52
9. APPENDIX 2
ETC MEMBER ORGANISATIONS
Austria Austrian National Tourist Office (ANTO)
Belgium: Flanders Tourism Flanders
Wallonia Wallonie-Bruxelles Tourisme (WBT)
Bulgaria Bulgarian Ministry of Tourism
Croatia Croatian National Tourist Board (CNTB)
Cyprus Cyprus Tourism Organisation (CTO)
Czech Republic CzechTourism
Denmark VisitDenmark
Estonia Estonian Tourist Board - Enterprise Estonia
Finland Visit Finland Finpro ry
Germany German National Tourist Board (GNTB)
Greece Greek National Tourism Organisation (GNTO)
Hungary Hungarian Tourism Agency
Iceland Icelandic Tourist Board
Ireland Filte Ireland and Tourism Ireland Ltd.
Italy Italian Government Tourist Board
Latvia Latvian Tourism Development Agency (TAVA)
Lithuania Lithuanian State Department of Tourism
Luxembourg Luxembourg for Tourism (LFT)
Malta Malta Tourism Authority (MTA)
Monaco Monaco Government Tourist and Convention Office (DTC)
Montenegro National Tourism Organisation of Montenegro
Norway Innovation Norway
Poland Polish Tourist Organisation (PTO)
Portugal Turismo de Portugal, I.P.
Romania Romanian National Authority for Tourism
San Marino State Office for Tourism
Serbia National Tourism Organisation of Serbia (NTOS)
Slovakia Slovak Tourist Board
Slovenia Slovenian Tourist Board
Spain Turespaa - Instituto de Turismo de Espaa
Switzerland Switzerland Tourism
Turkey Ministry of Culture and Tourism
53