Tourism Industries International Travel and Forecast for the US - Chart #16
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Yes, we still see positive growth over the next four years, with each region contributing positively to the record level in 2002. One key distinction, however, will be that by 2002 our North American neighbors will account for just over 48 percent of total arrivals, losing market share position to our overseas visitors.

Mexico:

In Mexico, the economy is expected to grow by a modest 3% this year, but a more robust 4.6% next year. The Mexican GDP will then expand within the range of 4.6% to 4.9% for the rest of the forecast period. Strong ties with the US economy in particular and with the NAFTA agreement in general will continue to be the engine of growth for the Mexican economy. The strong link between the Mexican economy and the U.S. economy is particularly illustrated by the fact that about 85% of Mexico's exports go to the U.S.

Another major influence is that the peso has firmed, reflecting growing international confidence in the Mexican economy. The Mexican peso depreciated to MP$10.66 per dollar on January 14 after the collapse in the Brazilian real and since then it has appreciated back to MP$9.7 per dollar in a strong comeback. However, this has not reversed the continuing trend of peso depreciation. When examining the impact of the peso's depreciation on travel to the United States, it is important to take relative consumer price inflation between Mexico and the U.S. into account. Although the peso is projected to depreciate about 15% in 1999, Mexico's consumer price index will increase 18% compared to less than 2% in the U.S. This illustrates that the Mexican traveler will not be significantly hindered by the dramatic decline of the peso as prices in the U.S. remain relatively stable.

An economic slowdown by Mexican standards this year translates into marginal growth in arrivals to the U.S. of 1.4%. This lackluster growth for 1999 is also a function of the strong increase of 10% experienced in 1998 that is unsustainable. Arrivals will then accelerate over the period 2000 to 2002 as solid economic growth resumes and NAFTA continues to increase the U.S./Mexican business ties. Growth in arrivals from Mexico are projected to average 2.3% over the next three years to top the 10 million mark by 2002.

Canada:

A key influence on Canadian visitation to the U.S. is the exchange rate of the Canadian dollar to the U.S. dollar. Over the past two years the Canadian dollar has fallen from about 731/2 cents/US$ early in 1997 to about 661/2 cents/US$ on March 24, 1999. The impact of this consistent decline has been clearly evident in the trend of arrivals which declined marginally (-1%) in 1997 and dramatically (-11%) in 1998. The Canadian dollar is expected to appreciate slowly over the forecast period. In 1999, the Canadian dollar is expected to average 67.6 cents to the U.S. dollar, up a little over a cent from its current value. Canadian arrivals to the U.S. are estimated to produce a slight increase of nearly 2% by the end of 1999. The dollar is expected to appreciate to about 701/2 cents U.S. by 2003.

Job creation has been generally strong in Canada in the past couple of years, and has shown increased vigor in recent months. In 1999, employment is expected to grow by 3.2 percent, the strongest rate since 1988. Over the 2000 to 2002 period, employment growth will moderate to an average annual rate of about 2.2 per cent. This will translate into a gradual recovery in U.S. arrivals with annual growth between 3.5% and 4.0% over the period 2000 to 2002.

Chart #16 World Region Forecast (3)

World Region Forecast (3)

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