Tourism Industries International Travel and Forecast for the US -- Chart 18
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Let's delve a little deeper into this forecast by evaluating specific countries. Although Tourism Industries has projected annual growth forecasts for 31 countries as well as the world regions. I will focus only on the top ten markets of change.

Japan: The Japanese recession has not reached bottom yet. The country's economic disability has been compounded by the collapse of the Ruble. The news is not all bleak. Some key areas of the economy are improving, such as the real estate market, and some bad loans have been already sold to foreign investors. Japanese arrivals are now expected to decrease by 4% in 1998, but return to a 2-3% annual growth rate over the next few years, maintaining their lead as the top overseas market for the U.S.

United Kingdom: Revised estimates for 1998 show that the U.K. economy is in much better shape than was previously believed. Consumer spending remains on an upward trend and GDP growth has been revised upwards. Inflation edged down ever so slightly. UK arrivals to the United States continue growing at very strong rates. Given the volatile world economic landscape, however, we don't expect the rally to continue this strongly for arrivals, so we have forecasted more in the range of 4% annual rates of growth to 2001.

Germany: Growth prospects for Germany are more difficult to assess when a change of government takes place. As of this review, GDP is expected to grow at a slower pace than anticipated. The Russian crisis has adversely affected business sentiment. With these considerations and the recent poor visitation performance levels, German arrivals in the U.S. are expected to decrease by 3% in 1998. However, not all news is negative. Inflation remains under control and there is a surplus in their current economic account. We have forecasted arrivals to recover, registering about 3% increases per year.

Brazil: The re-election of President Cardoso assures the continuity of governmental policies which tends to reduce market volatility. However, the Asian and Russian crises threaten Brazilian economic prosperity. The Cardoso administration has moved to make the Real more flexible, and has recently enacted austerity measures. However, if Brazil does devalue its currency (the Real), Latin America is likely to suffer a serious ripple effect. Currency speculators would focus on the Peso, leading to sharp devaluation and to a regional economic depression. Although we don't expect a devaluation of the Real, the upcoming events are volatile enough to increase the level of uncertainty for any outcome. As a result of the economic pressures and in spite of the political continuity, we expect Brazilian arrivals will continue to decrease in 1998 (-8%) and also in 1999 (-1%) before rebounding to a positive rate of growth in 2000 and 2001(3% annually).

Korea: South Korea's GDP declined by 3.9% in the first quarter of 1998 and a further 6.6% in the second quarter. Industrial production continues to decline; unemployment is edging up, and exports recorded a double-digit decline in July. There is a threat of expanding social unrest. In addition, Japan, Korea's main competitor for exports, has devalued the Yen. The sum of all these components adds up to a bleak diagnosis for a critically ill economy. The impact on travel to the U.S. is quite severe. Seldom, if ever, have we seen a dramatic 40% drop in arrivals from any country in a single year. Korean visitors to the U.S. will have that distinction in 1998. We forecast arrivals to remain flat in 1999 and then increase marginally (1-2%) annually to 2001.

Taiwan: While Taiwan's economy has slowed down, GDP growth is anticipated to be positive for 1998 (5.2%), an enviable performance given the regional malaise. Taiwan's healthy exports of electronic and information products to the U.S. have bolstered its economy. Thus, while the 1998 arrivals from Taiwan are expected to decline by 6%, the decline is expected to be short-lived. The strengthening of the economy forecasted for this country will cause arrivals to grow marginally in 1999 and then surge to the 3-4% per year range into the next century.

Argentina: Without suffering it's own economic crisis, a ripple effect looms on the Argentine horizon. Brazil's potential currency devaluation would certainly impact its nearby trading partners and competitors. Argentine arrivals are expected to be lower than previously forecasted. The outlook is for a 5% increase in 1998. The global economic shrinkage anticipated in 1999 will be felt in Argentina so we have forecast the growth of arrivals to be slower that year and then return to 5% annual growth for the new century.

Venezuela: Amid rumors of imminent maxi-devaluation, the presidential elections to take place in December 1998 position Venezuela at a political crossroads. The leading candidates have the economy on their agendas, each proposing a different solution. The outcome could lead to international opposition, domestic unrest and economic instability as international investors shy away and inflation surges. Venezuelan arrivals in the U.S. are expected to increase by 6% in 1998, slow to less than half that growth in 1999 and then recover to 6-7% annually to the end of our forecast period.
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Chart 18 - Forecast by countries

Forecast by countries

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