Fitch Ratings projects a continued recovery in Asia-Pacific (APAC) tourism throughout 2024, albeit at a slower pace compared to other regions, attributing this to less favorable base effects. The forecast anticipates visitation to reach 92% of 2019 levels, with international tourism receipts expected to exceed pre-pandemic figures by 6%. Most Fitch-rated APAC sovereigns have rebounded from the service balance shocks caused by the collapse in tourism revenues.
Despite the progress, the APAC region lags behind others where tourism has either recovered fully or approached pre-pandemic levels. Factors fueling APAC’s tourism recovery include robust demand, economic resilience, expanded flight capacities, government policies to stimulate tourism, and depreciated local currencies. Fitch’s analysis suggests that outbound travel from China could reach 86% of pre-pandemic levels, bolstering regional tourism dynamics, albeit with cautious spending trends expected to persist through the year.
However, risks remain prominent. These include slow restoration of international air travel, high airfares, elevated energy prices, and geopolitical tensions. A global economic downturn or significant challenges in the Chinese economy could dampen travel demand and spending, potentially hindering the region’s tourism recovery efforts. Climate change also poses challenges, particularly for economies reliant on nature-based tourism.
Sovereigns in APAC that heavily depend on tourism and have faced recent economic challenges, such as Thailand, are identified as most vulnerable. Additionally, frontier-market sovereigns with fragile external liquidity, like the Maldives, face heightened exposure to external shocks impacting tourism receipts.
Fitch’s baseline scenario anticipates a full recovery of international tourism by the first half of 2025. However, uncertainties persist, underscoring the region’s vulnerability to various economic and environmental factors.
