Australia’s economy will get a big boost from the end to China’s zero-Covid policy over the next two years JPMorgan said in a note Saturday. JPMorgan’s chief investment strategist Tom Kennedy said “The largest potential upside from reopening itself sits within the services sector given China is the largest consumer of Australian tourism and education exports.” JPM sees a full recovery in Australia’s tourism adding 0.5% to its gross domestic product and the return of international students from China will add another 0.4%, almost a full percentage point to Australia’s economic growth.
Prior to the pandemic, back in 2019, China accounted for 15.3% of all of Australia’s inbound tourism, making it the largest source of short-term visitors, JPMorgan said. It added that the average Chinese tourist’s spending was four times that of a tourist from New Zealand, the second-largest source of inbound tourists to Australia.
The three leading source countries where visitors came from were:
- New Zealand (98,600 trips)
- The UK (47,420)
- The USA (37,640).
Given China has only just flipped on its zero covid policy arrivals from China were not listed on the ABS’ top 10 list of countries that tourists came from.
“Our expectation is for the tourism-related consumption impulse to be spread over 2023 and 2024,” and “While the duration adjusted spending numbers are less striking, real GDP is an aggregate concept and so the absence of Chinese tourism has been a notable headwind,” Kennedy wrote.
The most recent data by the Australia Bureau of Statistics showed a total of 430,470 short-term trips were made to Australia in October 2022, 44% lower than levels seen in the same month in 2019, when the nation received more than 1 million short-term visitors.
Visitors arriving in Australia in 2021-22:
- There were 1,191,830 visitor arrivals, almost 8 times higher than the previous year
- New Zealand was the largest source country, accounting for 16% of visitors
- The most popular reason for travel was ‘Visiting friends/relatives’ (55.9%)
- The median duration of stay in Australia was 26 days.
China has only just relaxed its campaign against Australia for having the audacity to question China about why it did not inform Australia about Covid earlier. That led to a bitter standoff and trade war that is only just thawing.
The latest data showed students from China made up 26% of total enrollments, the largest portion from a single country.
“If education exports to China revert to 2019 levels, the impulse to real GDP would total 0.4%-pts, a useful impulse in the environment of slowing household consumption though not a panacea to prevent a growth deceleration,” Kennedy wrote.
Source: ABS, JPM
From The TradersCommunity Research Desk