China reopening to boost tourism, but overall impact on PHL economy seen as modest
CHINA’s reopening is expected to boost tourism in the Philippines, though the overall impact on the economy will likely be modest, according to MUFG Global Markets Research.
“The return of Chinese tourists will likely significantly benefit tourism in the Philippines,” it said in a report.
China was the second-largest source of visitors in 2019 with 1.7 million arrivals or 22.2% of the total.
“This greatly outweighed the 6.3% from intra-Association of Southeast Asian Nations (ASEAN) sources. At the same time, returning Filipinos will likely provide another source of travel receipts,” it added.
This year, the Philippine Travel Agencies Association is expecting international visitor arrivals to hit 8.26 million.
The Department of Tourism is targeting at least 4.8 million arrivals this year. In 2022, the Philippines took in 2.7 million tourists.
The report said that the expected boost in tourism is due to the Philippines reducing its coronavirus disease 2019 (COVID-19) restrictions.
“Visitor arrivals were only 3% of pre-pandemic (2019) levels in December 2021. However, this has climbed to 56% by December 2022. This was supported by ASEAN tourists, at 55% of 2019 levels,” it added.
It added that travel from China improved to 7.2% of pre-pandemic levels in December 2022 from 0.9% in December 2021.
MUFG said it also expects gross travel receipts to increase this year.
“Given current trends, we anticipate broader upsides in 2023. Gross travel receipts may hit $6-8 billion in 2023, higher than an expected $4 billion in 2022 and catching up to $9.8 billion in 2019,” it said.
“At the same time, the Philippines may see fairly balanced net travel receipts, after a deficit of around $500 million in 2022. The boost from China will likely be significant and outweigh outbound travel,” it added.
On the other hand, the report said that the impact of the Chinese reopening on the Philippine economy will “likely be modest,” as the Philippines is mainly domestic-demand driven.
“The improvements from tourism, further boosted by travel from China, will likely benefit all tourism related sectors. Pre-pandemic, major inbound tourism expenditure was on transport (36.6%), accommodation (31.9%), as well as food and beverage (22.5%). The accommodation and food services sectors employed 2 million workers in 2019, accounting for almost 5% of total employment,” it added. — Luisa Maria Jacinta C. Jocson
