KATHMANDU, JANUARY 25
The emergence of the Omicron variant suggests that 2022 will be another challenging year for Asia's tourism and travel industry, according to a latest Economist Intelligence Unit article.
'Zero-COVID'-like policies look set to remain in force in China, including Hong Kong and Macau, while international border and quarantine policies in Asia will generally be tighter than elsewhere in the world, even though countries such as Australia and New Zealand have begun to transition from the stringent approaches they adopted in 2020‐21.
Catering for domestic tourism demand will, therefore, remain an important consideration for firms, especially in China, the article titled 'Asia: What to watch for in 2022' says. The country's domestic duty-free market, centred on the tropical island province of Hainan, has boomed during the pandemic, owing to the difficulty of travelling internationally (in 2019 Chinese consumers purchased around 40 per cent of global duty-free items).
"We expect growth to be maintained this year, even after travel policies are eventually loosened from late 2022, aided by the increased price competitiveness of the domestic duty-free sector and the opening of duty-free shopping options in a wider number of cities," as per the authors.
"We forecast that domestic duty-free sales in China will grow four-fold to over 258 billion yuan ($40 billion) by 2025.
After posting a strong recovery in 2021, the Asia-Pacific region is set for more modest economic expansion in 2022, the authors have said. This will principally reflect weaker growth in China, where EIU forecasts expansion to slow to 5.3 per cent in 2022, from an estimated 8.1 per cent last year. This will be offset to some extent by accelerating growth in Indonesia and Japan, where recoveries in 2021 were disrupted by COVID‐19 outbreaks, and steady economic momentum in India, where real GDP is forecast to expand by seven per cent in fiscal year 2022-23 (April to March).
Indonesia's currency, the rupiah, will be among the most vulnerable, given the country's traditional twin fiscal and current-account deficits and reliance on foreign capital inflows, the authors have said.
Another emerging-market currency, Indian rupee, is likely to prove more resilient. "One source of support will be capital inflows generated by the likely inclusion in 2022 of Indian bonds in several global bond indices."
Moreover, the authors of the article have said that the policy action aimed at tackling climate change is likely to accelerate in 2022, after a number of Asian economies committed to 'net zero' carbon targets ahead of the UN Climate Change Conference (COP26) held last year. Seamless execution of policies aimed at reducing emissions is unlikely, given Asia's reliance on fossil fuels, energy security concerns and, in some cases, the near-term social and economic costs of changes. However, businesses should still expect meaningful policy changes, given Asia's exposure to the effects of climate change; growing pressure on governments to reduce pollution; and external pressure to climate-proof regional supply chains.
A version of this article appears in the print on January 26, 2022, of The Himalayan Times.
