Tourism Industries International Travel and Forecast for the US - Chart #18
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Japan:
Japan's economy reached the nadir of its recession last year. However, the recovery path will be slow. The weakness and uncertainty of GDP growth is due to a weak financial sector and the consolidation of non-performing loans. The pace of bank and loan re-structuring is expected to continue through the year 2000. Therefore a healthier financial system is not expected to be fully operational by 2001 at best. As a result, real GDP growth will also sputter until 2001. Japan's government has proposed fiscal policy changes designed to boost consumer spending by lowering taxes. In 1999, the recovery has been evident compared to last year's depth of decline, but positive increases have been hampered by the weak exchange rate making it too soon and expensive to travel to the U.S. until the rate differential is less, thus a 4% decrease is estimated for Japanese arrivals to the U.S. in 1999. The strong stock-market recovery if continued, could help increase consumer confidence. In addition, a more favorable exchange rate could lead to stronger-than-expected 2% growth in 2000 and 3% in 2001, For Japan the forecast period continues with an average 2% growth per year yielding an overall 6% increase in arrivals to nearly 5.2 million by 2003.

United Kingdom:
The government began using monetary policy to stimulate economic growth. The main policy change has been a 250-point drop in short-term interest rates since October 1998. As a result, consumer spending has been steadily increasing. In addition, declining unemployment boosts consumer confidence encouraging spending. Real GDP is expected to grow by about 1.04% in 1999 (fueled mainly by the consumer sector) over 2.5% in 2000 and moving to 3.01% in 2001. In summary, the strong GDP growth, lower unemployment and increased consumer confidence will have a positive impact on travel to the U.S. through out the forecast period. We project a 27% increase overall to a height of nearly 5.1million British visitors by 2003, averaging a 5% average growth rate. Now that's bullish for the U.K.

Germany:
The outlook for Germany purports consistent real growth over the forecast period as international conditions improve and gains from the Euro are realized. Germany's real gross domestic product (GDP) is expected to post a 1.9 % increase in 1999. The economic recovery of the Asian tigers bodes well for German exports. Consumer spending continues to rise at record setting pace. In addition, business confidence remains high. It is a welcome relief to bring you such positive news for our third largest overseas market. German arrivals should grow at a healthy 3.8% in 1999 and improve to averaging over 4% for each of the remaining years in the forecast period, rendering a 23% increase overall to over 2.3 million German visitors by 2003.

Brazil:
The January devaluation of the Real that could have sent the Brazilian economy into a tailspin did not have the feared consequences. Investor and consumer confidence on the Brazilian economy is rebounding. Nevertheless, according to our sources and WEFA, the internal economic situation is worrisome. The increasing government's debt has a potential for unleashing inflation and for currency devaluation. As a result of the tight monetary policy that focuses on keeping inflation in check, consumers' spending slowed down. The large fiscal deficit could derail the recovery. Thus, 1999 and 2000 will be critical years for the Brazilian economy. The combination of increasing fiscal deficits and a policy to target inflation will have an impact on interest rates and further constrain consumer consumption. Therefore, we expect Brazilian arrivals to the U.S. to decrease by nearly 17% in 1999. Then the story turns around. With the expectation of the government reforms to succeed, we project an increase of 2%in travel to the U.S. by 2000 and then an average of over 4% for the beginning of the new century, gaining strength by 2003 with 5% growth to regain its losses to close to the 1998 level with 891,000 Brazilian visitors to the U.S. So keep up the investments in this critical South American market.

Italy:
Economic growth, the GDP, for Italy slowed down from the last quarter of 1998 through the first quarter of 1999. In addition, the Asian crisis had a negative impact on Italian exports. However, the negative shocks have been ameliorated by the Asian recovery and by large increases in service-sector employment. Moreover, the current labor negotiations are expected to conclude with increases in wages higher than the increases in inflation , resulting in more discretionary income for consumers. The result of these events and expectations is a slightly improved horizon for arrivals to the U.S., averaging 2% for the first few years and growing to over 3% for the last two, keeping Italy in the top line up for visitors to the U.S.

Chart #18 ECONOMIC ANALYSES OF SPECIFIC MARKETS -- LONG-TERM

ECONOMIC ANALYSES OF SPECIFIC MARKETS -- LONG-TERM

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