Travel industry experts anticipate no revival of foreign spending by Germans this year, even without an armed conflict in the Middle East…
Travel industry experts anticipate no revival of foreign spending by Germans this year, even without an armed conflict in the Middle East. Even in an optimistic scenario, we are looking for stagnating outlays under these circumstances and because of the low starting level, predicted economist Renate Finke in Dresdner Bank`s yearly analysis of the German travel account. The study said that the murky geopolitical situation, evoked by the words `Iraq` and `oil`, would influence the global economy and conditions for travel in 2003.
Without this, however, the economic outlook is not entirely bleak, the Dresdner study shows. Business sentiment has perked up in the European Union, except in Germany. This could lift spending by foreign visitors in Germany by around 2 per cent to nearly EUR 21 billion from last year`s EUR 20.4 billion, even if a weakening US dollar keeps Americans at bay. But a spiking oil price could spoil this outlook in the event of upheaval in the Middle East, depressing Germany`s travel receipts by scaring off some foreigners.
While a minor setback from a temporary jump in the oil price during a brief conflict could be absorbed, the unforeseeable effects of a protracted confrontation are impossible to measure, said Dresdner.
Much the same would apply to spending by German travellers abroad. Even in a favourable geopolitical scenario, the study said, insecurity about jobs and a prevailing economic gloom would cause people to skimp on vacations. A survey by Forsa market research institute found that 60 per cent of German households would have less to spend abroad this year, even if tour operators reduce prices. And the limp economy would also discourage business trips.
Two decades of rising spending by German travellers abroad reversed in 2002 after having ended in stagnation the previous year. Yet foreign visitors, especially close neighbours and US tourists, spent more money in Germany last year, shrinking the chronic net outflow in the national travel account.
Extrapolating from Deutsche Bundesbank`s preliminary balance of payments data, Dresdner estimated that German travellers spent about EUR 50.5 billion abroad in 2002. This was about 2.5 per cent less than the EUR 51.6 billion they spent the previous year and in 2000, when an unbroken 20-year rise in foreign travel outlays came to an end. Germany`s receipts from foreign visitors, however, rebounded last year from EUR 19.2 billion in 2001.
Dresdner tentatively traced the improvement to visitors from neighbouring countries, where the slump in consumption has not been as pronounced as in Germany, although people also became more inclined to pick destinations reachable by train or road rather than plane in the aftermath of 11 September 2001.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
