International tourism across the Asia-Pacific region is tipped to recover more slowly than previously thought, impacted by low consumer confidence and the expected continuation of China’s “zero-COVID” policy through most of 2022, according to Fitch Ratings.
In a Tuesday note, Fitch analysts George Xu and Stephen Schwartz said China’s reluctance to reopen its borders would continue to impact the region in 2022, particularly in markets that rely heavily on international tourism, resulting in another subdued year of APAC travel ahead.
“International travel remains subdued across APAC as border restrictions are being reimposed amid the Omicron COVID-19 variant,” the analysts said.
“Fitch Ratings expects a slow recovery in international tourism across APAC during 2022, despite higher vaccination coverage and stepped-up reopening efforts.
“The evolving global epidemiological situation poses a high degree of uncertainty and a tourism recovery in destinations with low vaccination rates, such as the Philippines and Indonesia, will remain vulnerable to setbacks. Pent-up travel demand remains to be diverted domestically, as we believe it will take time to restore confidence in cross-border travel safety.
“We expect China to maintain its ‘zero-COVID’ policy through most of 2022, with quarantine-free travel corridors set up only for Macau and Hong Kong. China was a key source market for tourism-dependent economies, such as Thailand, pre-pandemic.”
Also vulnerable, Fitch says, are the likes of Japan, which tightened border controls once again in November, and Singapore, which has temporarily suspended the sale of plane tickets for its “vaccinated travel lane” scheme.
“Travel prospects are a key rating driver for tourism-dependent sovereigns,” the analysts wrote, noting that “tourist arrivals have been well below pre-pandemic levels across APAC” even with jurisdictions such as Australia having recently reopened their borders.
“APAC economies have been slower to ease cross-border travel restrictions than other regions,” they said.
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