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Impact of dollar inflation retards boom in Asian tourism !
Asia was predicted as the powerhouse for world tourism growth in 2013 with strong growth of 7% in outbound travel as incomes rise and consumers are able to travel more. The outlook for 2013 was even stronger. However, the recent inflation in the dollar prices has resulted in changing waves in the Asian tourism market. Asians, very much like the European and Americans were planning to move abroad. The travelling habits of the Asian travelers certainly had a blow with this sudden inflation in the dollar price, subsequently resulting in the deflation of Chinese, Japanese, Indian and Nepalese currencies.
Economic theory informs us that an appreciation of the dollar will impose transitional costs on the American economy, lowering exports, raising imports, and negatively affecting the global tourism index as a whole. Experts generally predict that the strong American dollar will restrict economic growth both this year as well as in 2014.
The outlook for Asian outbound tourism this year is overwhelmingly positive pertaining to the continued good prospects for the region’s economies. China and Japan are both performing very strongly this year with double-digit growth rates in outbound travel. The differences between environments of currency inflation and currency deflation is extremely important to investors, in fact, it is probably the biggest factor investors must get right for the next 5 to 8 years. This one factor not only decides how an investor needs to invest, but it also decides what the “price charts” will look like.
According to a report published in World Travel Trends Report: Prospects for Asian tourism in 2013 were even stronger. Only one third (32%) of Asians said the financial crisis would impact their travel planning while two thirds (68%) said they will not be affected. Last year, slightly more Asians (36%) were impacted by the crisis. On a similar positive note, 29% of Asians planned to travel more in 2013, up from the 26% figure last year. Only 16% plan to travel less, compared to 21% last year, while 52% planned similar travel levels in 2013 (46% last year).
In sum, while the currency appreciation has been unprecedented in terms of its speed and there will no doubt that traveling costs in the transition to a more appropriate valuation of the American dollar will be very difficult to cope up. Going against all the odds, the world tourism market expects a steadiness in the market to enhance the surge in the industry and awaits a balance in the exchange rates very soon.

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