Executive summary
- International tourist numbers to Asia are expected to fall off a cliff in 2020, with the adverse economic impact reflecting each country’s dependence on tourism, and the composition of its domestic and international visitors.
- International tourist receipts account for about 4% of GDP across Asian economies on average, but the economic impact is amplified when taking into account spill-overs to employment.
- The recovery in tourism will likely be much slower than the SARS outbreak experience because the containment costs of COVID-19 are so large, and the global economy is sliding into a painful recession.
- Investors will have to be cautious and selective given the likelihood that the post COVID-19 environment is fundamentally different. At least until a COVID-19 vaccine is discovered, social distancing will be sustained – resulting in weaker performance from risk-assets linked to tourism and transport, but stronger performance from utilities, healthcare, and technology.
- China seems well-placed to lead the global recovery while other countries more dependent on global trade, like South Korea and Taiwan, will lag. Other Asian countries, like Thailand, Hong Kong, Malaysia, and Singapore, will suffer a ‘double-whammy’ of stress because trade and tourism are very important to economic activity.
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