Tourism in Asian countries have begun to rebound as COVID-19 restrictions have been lifted. But they must adapt to various challenges to reach its full potential, accordinmg to a latest OECD report.
With most of the sector comprising micro, small and medium-sized enterprises, they need assistance in digitalising their operations, said the report – Economic Outlook for Southeast Asia, China and India 2023: Reviving Tourism Post-Pandemic.
The workers also need to enhance their digital skills to enhance productivity, and informal and migrant workers need to be integrated into social support systems.
TRAVEL AND TOURISM
The OECD said that travel and tourism generated approximately 12 per cent of GDP in Southeast Asian economies before the COVID-19 pandemic. It provided around 11 per cent of employment in Emerging Asia as a whole. As of now, it said that the return of tourists would be key to further bolster economies amidst uncertainties and weak external demand, the analysis said.
These factors, combined with more demanding working conditions and lower wages than in many other sectors, have made recruitment difficult. As tourism continues to pick up, there is a risk that the recovery could stall where labour forces are not large or skilled enough.
The growth in Asia is proving resilient with real GDP growth in 2023 projected to 5.3 per cent on average in Emerging Asian economies (ASEAN-10, China and India), and by 4.6 % on average in ASEAN economies alone.
In the OECD said that the export sector helped boost economic growth and maintain the momentum of the region’s economies. Inflation combined with interest rate differentials among countries increase the volatility of capital flows and put pressure on local currencies in the region, the OECD said.
Ongoing supply-side bottlenecks threaten food security and may lead to even higher prices of goods and services which could impact both external and domestic demand.
NEW TRAVEL PREFERENCES
There is also a need to adapt to new travel preferences post pandemic. In addition to local travel and rediscovery, the confinement of lockdowns and focus on illness prevention reinvigorated desires for nature tourism or experiences focused on health and wellness.
“The pandemic changed tourist preferences, with greater interest in local travel, nature destinations and wellness tourism. It also heightened awareness of environmental issues, which is an opportunity to enhance sustainable tourism,” OECD Secretary-General Mathias Cormann said. “Diversifying and expanding inbound markets by increasing domestic and intra-ASEAN tourism and addressing the gaps in ICT infrastructure, cybersecurity, and digital skills will help to revive tourism as a growth engine for Emerging Asian economies.”
The post-lockdown reopening of China will serve to counterbalance and provide a necessary economic boost for the region. Developing stronger transportation links, especially low-cost airlines, could promote more intra-ASEAN tourism, especially to destinations that receive relatively few international travellers. India remains a largely untapped source market despite its large population and certain Southeast Asian countries could diversify their tourist flows to become less reliant on any single country as a major tourist source.