Comment: Impact of Eurozone crisis on travel

Euromonitor International evaluated the potential impact of the Eurozone crisis on the region"s travel and tourism industry based on a review of previous economic downturns. Paz Casal, Travel and Tourism Analyst at Euromonitor International investigates further.


"To best illustrate the potential impact of the Eurozone crisis on the region"s travel and tourism industry, Euromonitor International modelled three different outcomes for 2012 - one best case scenario and two worst case scenarios, the latter two being a Greek exit and the complete break-up of the Economic Monetary Union.
Best case scenario
Even in the best case scenario, the prospects for Europe remain weak in 2012. The second election Greece came down in favour of Europe and the associated austerity measures, which puts an end to the uncertainty surrounding Greece's place in the Eurozone. Despite a bailout for Spanish banks, market concerns remain regarding the ability of Spain and also Italy to fund their sovereign debt. Based on the assumption that the Eurozone crisis is not exacerbated further, the EuroZone is expected to experience a 0.7% contraction in real GDP in 2012 due to recessions in its Mediterranean members, followed by a mild expansion of 0.8% in 2013.
Worst case scenario 1 - Greek exit
The second election in Greece marked a major event for the Eurozone project and the European Union as a whole. Increasingly seen as a referendum on Eurozone membership, the result has abated concerns that Greece will be forced out of the euro. The cost of a Greek exit from the EuroZone would be heavy, albeit not marking the outright end of the euro, with GDP expected to decline by 2.5% for the Eurozone as a whole.
Worst case scenario 2 - EuroZone break-up
The potential collapse of the Eurozone remains a possibility and it cannot be ruled out that several Member States would be forced to leave the euro, which in turn could cause a chain reaction, ending with a complete break-up. This would lead the region's economies to shrink by as much as 9.8% in the first year, followed by a further decline of 2.8% in 2013. A recession would be experienced across the entire Eurozone, dragging down the global economy into a potential global double dip.
Inbound tourism - best and worst case scenarios


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Vietnam’s income per capita far lagging behind regional countries | Look At Vietnam

Vietnam’s income per capita far lagging behind regional countries

April 3, 2012

LookAtVietnam – The average income per capita of Vietnamese people is
still far lagging behind the income per capita in ASEAN countries and China,
though the income has been increasing considerably in the last years as a result
of the doi moi (renovation) period.

Vietnamese still poor…
Meanwhile, the scenario that Vietnam can catch up with China and other
ASEAN’s economies would still be a far away dream, if Vietnam lacks the driving
force for reform.
This is the warning released by a scientific research work at the national level
carried out by the Hanoi Economics University. The research work was conducted
at the request of the National Assembly’s Economics Committee, which cited the
figures about the income per capita in Vietnam and in other regional countries
released by the International Monetary Fund (IMF) in 2010.
If considering the exchange rate, the GDP per capita increased from 114 dollars
in 1991 to 1061 dollars in 2010. Meanwhile, China’s GDP per capita increased
from 353 dollars to 3915 dollars during the same time.
As such, the income per capita of Vietnamese people, which was equal to 32
percent of China’s, then dropped to 27 percent in 2010.
If considering the PPP (purchase parity power), the GDP per capita in Vietnam
was 706 dollars in 1991 and then increased to 2948 dollars in 2010. During the
same time, the figures in China rose from 888 dollars to 6786 dollars.
As such, the income per capita in Vietnam was equal to 80 percent of Chinese in
1991, but the figure dropped to 43 percent in 2010.
If comparing with other ASEAN countries, though the gap between Vietnamese and
ASEAN income per capita has been narrowed in the last 20 years, the gap is still
big at this moment.
Thoi bao Kinh te Saigon quoted Dr Pham Hong Chuong from the Hanoi Economics
University as saying that Vietnam’s GDP per capita in PPP was less than a half
of that of the Philippines or Indonesia, 1/5 of Thailand, 1/10 of Malaysia in
1991.
The figures then exceeded the thresholds of ¾, 1/3 and 1/5 of the above said
countries after nearly 20 years.
In general, Vietnam’s GDP per capita in 2010 was 1061 dollars by exchange rate
and 2948 dollars by PPP, which, according to Chuong, are far below the average
levels in Asia and the world.
After more than a quarter of a century of renovation, Vietnam has escaped from
the group of countries with low income to the group with medium income, in
accordance with the World Bank’s standards.
However, according to Chuong, Vietnam’s economic growth still cannot show the
strong determination and its capability to escape from the risk of lagging
behind in the development.
The report also showed the unemployment rate of 4.6 percent in urban areas and
20 percent in rural areas, which means that over 10 million workers stay
unemployed in Vietnam.
In fact, the fact that Vietnam’s income per capita is outdistanced by regional
countries is not a new story.
The 2009 Vietnam Development Report of the World Bank showed that Vietnam’s
income per capita was behind by 51 years in comparison with Indonesia, 95 years
with Thailand and 158 years with Singapore.
… but spend money like water
The fact that Vietnamese are extravagant consumers has become well-known in the
world. Nguyen Tran Bat, a well-known economist, said on Doanh Nhan that his
foreign friends, including billionaires, many times expressed their surprise
about the spending money like water of Vietnamese people.
A friend of Bat’s, a French professor, who arrived in Vietnam in 1970s, saw a
taxi driver smoking a 555 cigarette and asked how many 555 cigarettes could he
buy with his salary. The driver said that his salary was just enough to buy 3-4
cigarettes only. The French professor then said that Vietnamese people even
spend more than American.
C. V