Friday, June 11, 2010

GDP growth may rise 1-1.5 points if STB targets met

SINGAPORE'S real GDP growth could rise 1-1.5 percentage points on the back of higher tourism receipts if the Singapore Tourism Board's (STB) targets are met at the end of the year.

In a report, Credit Suisse estimates that every dollar increase in tourism spending could add an additional $0.80 to GDP growth.

'If this forecast is correct, we estimate it would increase the ratio of tourism receipts to GDP to 6.2 per cent in 2010 from 4.7 per cent in 2009,' it said in the report, having used input-output tables to conduct a multiplier analysis of the tourism sector.

STB is projecting to see 11.5 million to 12.5 million visitor arrivals this year - an increase of 20-30 per cent year-on-year - and rake in $17.5 billion-$18.5 billion in tourism receipts, up 40-50 per cent y-o-y.

In 2009, the number of visitors dropped 4.3 per cent for the full year to 9.7 million, and receipts plunged almost 20 per cent to $12.4 billion.

'Based on historical growth rates, we estimate that visitor arrivals this year are on track to meet the government's target,' the report added.

The improving global economy, as well as the debut of Resorts World Sentosa and Marina Bay Sands, have helped fuel the recovery in the tourism sector.

In the four-month period of January-April, visitor arrivals were 20 per cent higher year-on-year at 3.6 million and 6 per cent higher from the same period in 2008.

However, Credit Suisse also highlighted the limitations of the data and multiplier analysis model, adding that it may take some years before the benefits or costs of the two integrated resorts and the rise in visitors can be accurately ascertained.

The report also said that the decline in the euro and the weaker European economy are unlikely to have a significant impact on Singapore's tourism industry since the majority of visitor arrivals stem from the region.

Last year, visitors from Europe accounted for about 13.5 per cent of total visitor arrivals. Their two biggest contributors to Singapore's tourism receipts, the UK and Germany, only contributed 4.5 per cent and 1.8 per cent respectively of total tourism receipts in 2009.

'Asian economies have remained the biggest contributors to Singapore's tourism market in recent years in terms of visitor arrivals and tourism receipts,' the report concluded.

Source: Business Times, 11 Jun 2010

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