Obsessing over Brexit and Trump has led economists to miss a “good news story” of global growth, delegates were told at the ITM annual conference in Birmingham.
But leading economist Jim Power warned that Brexit is a “long-term game” and cited a range of challenges to economic stability, including high levels of government debt, growing protectionism and the threatened future of the EU.
“What’s happening in the global economy, more than anything else, is what drives travel,” said Power.
“The good news is after a having lived through a global nightmare, things are getting better. The global economy is doing well,” he said citing positive growth figures in the US, the UK and the Eurozone.
“The Eurozone has been a serious and serial underperformer for the last decade. But in last 6-9 months we’ve started to see palpable signs of growth.”
Meanwhile, after a slowdown, China’s economy is stabilising – an important factor as it’s the world’s second-largest economy, he said – and set to become more significant as ‘Easternisation’ continues, with the power shift from West to East an “incredible economic and political dynamic in the future.” But Power added that high Chinese debt levels are a threat to its stability.
The IMF has forecast healthy global economic growth for the next two years, predicting 3.5-3.6 per cent for 2017 and 2018. But note, said Power, the difference between the ‘advanced’ Western economies (2 per cent growth) and the ‘emerging’ economies (4.5-4.8 per cent), with India leading those major Eastern economies with a projected 7.7 per cent GDP growth for 2018.
Another key factor that will affect the travel sector is oil prices. Power told delegates that OPEC is “starting to get its act together”, and by controlling production flow will be aiming for a price of around US$75 per barrel over the next few years.
Power said one positive outcome of Donald Trump’s administration – and potentially the UK’s Brexit process – is much greater investment in travel and transport infrastructure, which is “badly needed” following the years of fiscal austerity after the financial crash.
But he warned of potential ramifications of Brexit, including the complexity of the World Trade Organisation tariff regime – which has more than 5,000 different tariff rates.
ITM opened the conference with a ‘Top 10’ of technology developments that it considers most likely to impact on business travel. ITM leaders including outgoing chairman Mark Cuschieri, incoming chairman Karen Hutchings and outgoing CEO Simone Buckley presented a range of innovations from blockchain payment technology to AI ‘bot’ assistants, to the growth of Facebook Messenger as a transaction platform – it now has more than 1.2 billion monthly users, with airlines and aggregators such as Skyscanner selling on the platform.
They cited various tech trends including the expansion of ‘sharing economy’ providers, with the likes of Wingly offering ride-sharing on private planes. Also in the Top 10, Uber’s autonomous Air Taxi being tested for rollout in Dubai and Dallas in 2020, and KERV’s finger ring that offers wearable contactless payment capability.