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Will International Tourism Withstand the Loss of Purchasing Power?

35 mins.
23 MARCH, 2023
Pedro Larrasquitu
Ignacio de la Torre
Leopoldo Torralba
Tourism sector Spain AER España
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Whilst there has been a robust rebound in the number of tourists and their spending during the latter part of 2022, and the data released in the early months of 2023 suggests encouraging results, the sector remains shrouded in uncertainty. The industry is heavily reliant on economic cycles. Consequently, it is imperative to closely monitor variables such as inflation, wages, erosion of purchasing power, the banking crisis, or interest rate hikes to accurately predict its future performance in the upcoming months. As such, in this chartbook we analyse the current context with the aim of establishing the likely evolution of international tourism. We do so by answering the following questions, among others:
Will there be a sustained surplus of savings to counteract the impact of rising inflation in tourist-issuing countries?
Will foreign labour markets and economic growth collapse?
What will be the performance of sector costs?
In short, will international tourist volumes and their spending reach normalised levels?

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