A report from CWT and the GBTA has identified a number of trends and risks that could have an impact on the travel sector next year:
Emerging market performance
Economists continue to watch China closely as policymakers aim to rebalance the Chinese economy toward consumption, which may lead to a potential “hard” landing economically speaking. India remains the biggest and brightest among emerging markets but will continue to face market reform challenges moving into 2017. Both Russia and Brazil are in the midst of recession, and in the most likely scenario, both economies are expected to further contract in 2017.
Financial market turbulence
Financial markets experienced significant volatility in Q4 2015 and Q1 2016. While markets have been more stable over the last few months, there is a higher-than-normal risk that economic or geopolitical shocks would force financial markets back into turmoil.
There has been heightened unrest around the globe with terror events in Istanbul, Paris and Brussels and other major terror events across Asia, The Middle East and Africa. Political risks will have an impact in 2017, including results of the 2016 U.S. elections, political scandal in Brazil, and the rise of anti-establishment parties throughout Europe. Refugee flows and global epidemics are also threatening economic stability in some countries and regions.
The UK referendum on leaving the EU
The uncertainty of the next two years for the now imminent “Brexit” will have the most pronounced impact on Western European economies but could have ripple effects on the broader global economy.
The U.S. Federal Reserve and impact of rising U.S. interest rates
The expectation pre-“Brexit” was that the Fed would continue to slowly adjusts rates upward over the next couple years, but recent comments by the Fed now make these rates unpredictable. Given the current fragility of the global economy and the unprecedented period of expansionary policy by the Fed since the Great Recession, impacts on both global equity markets and the global economy should both be monitored closely.
Last but certainly not least, a protracted period for low oil prices could further destabilize the outlook for oil-exporting countries and, in a ripple effect, impact the global economy.