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As the government stops all Chinese visitors from entering the country in response to the coronavirus outbreak, economists are scrambling to try and work out the likely impact on the Australian economy from the hit to tourism and student expenditure. It’s clearly something of a guessing game but, as reported in the AFR last week, the best guess at this stage would appear to be a 0.2% hit to Q1 GDP; obviously this could be worse if the travel ban remains in place for an extended period. Additionally there is likely to be another smaller hit to Q2 GDP.
Using these estimates as a starting point, and taking into account the greater importance of tourism in the Cairns economy to that nationally (13.5% versus 11.9%), as well as the greater importance of international tourism versus domestic tourism (26% versus 23%), and the higher percentage of Chinese visitors coming to Cairns (25% versus 15%) we can estimate that a 0.2% hit to national GDP could be as high as a 0.4% hit to Cairns Gross Regional Product (GRP) in the first quarter of this year, followed by another 0.2% hit in Q2.
An alternative approach would be to estimate the percentage of total regional value add that can be attributed to Chinese visitors. Using NIEIR data we have estimated that this could be as high as $17.5 million per quarter (0.7% of GRP). Obviously not all Chinese visitor revenues are lost for the full quarter so this again would be estimated to be about a 0.4-0.5% total hit to GRP.
In summary, we are estimating that, assuming the Chinese travel ban lasts no longer than a few weeks to a month, the hit to the Cairns economy in the first half of 2020 could be between $10 and $12 million. This would deduct about 0.15% off total Cairns GRP for the year.
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February 3rd, 2020 at 7:52 am
Is there a source on the 25% Chinese number for FNQ I wasn’t aware this was in the IVS data? May be wrong but group tours were already banned from within China so segmentation becomes critical.
Particularly education where the seasonal influx peak is February. The current two week ban expires before the start of the JCU teaching period on February24. Interesting to observe what happens around that.
February 3rd, 2020 at 8:27 am
Hi Mark, the 25% figure comes from the IVS survey by way of a custom report they produce for me. It’s no longer included in the normal release. You’re quite right about the segmentation and especially education. These are simply best guess estimates based on the data we have available and will obviously need to be revised as things change. Cheers, Pete
February 3rd, 2020 at 8:46 am
“It’s no longer included in the normal release.”
Was it ever included in any “normal release”?
I would question it given the high margins of error around this survey data at a regional level.
February 3rd, 2020 at 8:52 am
Look. FFS. The best thing tourism authorities could do would be to just release all data rather than the perpetual game playing and political PR we are inflicted with.
February 3rd, 2020 at 10:10 am
Yes, the old IVS pre-Dec 2013 used to provide regional breakdown by country of origin (Table 12). As you say, always margins of error around small sample sizes.