Chinese international tourist spending has surged over the past decade, which is one reason to think that the economic spillovers will be greater for the coronavirus than they were for SARS. But outside of Asia (and Mauritius), Chinese tourist spending is still a very small share of spending in EM economies.
- Chinese international tourist spending has surged over the past decade, which is one reason to think that the economic spillovers will be greater for the coronavirus than they were for SARS. But outside of Asia (and Mauritius), Chinese tourist spending is still a very small share of spending in EM economies.
- There are several channels through which the impact of China’s coronavirus will spread to other EMs, but the collapse in Chinese passenger transport numbers over the Lunar New Year underscores that tourism sectors will be the first to take a hit.
- Chinese tourist spending abroad has risen 15-fold from around $17bn per year around the time of SARS to around $260bn, or 0.3% of global GDP. (See Chart 1.) That’s about the size of Vietnam’s entire economy, and bigger than Romania, Portugal and Peru. Chinese tourism expenditure abroad is now almost twice that of the US, the world’s second largest tourist market, and three times that of third-placed Germany.
- Many EMs in Asia are highly reliant on Chinese tourist spending. Chart 2 shows Chinese tourist spending in EMs as a share of GDP (CE estimates are shown with an asterisk). Hong Kong, Thailand and Cambodia will be hit hard by the fall in Chinese tourism. We think that it will knock up to 3% off their GDP in Q1.
- Thailand and Cambodia could be hit even harder if tourists from elsewhere stay away from the region as a whole. Total tourism receipts in these countries are equivalent to 14% and 18% of GDP, respectively. Moreover, Cambodia’s large current account deficit (equivalent to 12% of GDP) means that lower tourism receipts will exacerbate strains in its balance of payments.
- Outside of Asia though, Chinese tourism is still limited. Even in countries with huge tourism sectors (e.g. Croatia and Jamaica), China typically accounts for just 1-2% of total visits. Only Mauritius is likely to be affected. Chinese tourist spending there is equivalent to around 1% of Mauritian GDP. And around 25% of visits occur in January and February, so the direct loss of income in Q1 could be up to 0.25% of GDP.
- All told, aside from Asia, the spillovers via tourism are likely to be limited. Instead, the key for other EMs will be the knock-on impacts via lower commodity prices, currencies and – if China extends factory closures – global supply chains. We’ll be writing more on these channels in the coming days and weeks.
Chart 1: Chinese International Tourism Spending
Chart 2: Chinese Tourism Spending
Sources: World Bank, Capital Economics
Sources: Refinitiv, CEIC, World Bank, UNWTO, Capital Economics
Edward Glossop, Emerging Markets Economist, +44 20 7808 4053, firstname.lastname@example.org