The global economy is in a challenging state, faced with the threat of ‘slowbalisation’, where the world is turning against globalisation, and rising geopolitical risks, according to Andrew Staples, global editorial director of the Economist Corporate Network, The Economist Intelligence Unit.

Staples, who shared this observation at the inaugural SG Tourism Leaders Engagement Series in November, an event co-presented by TTG Asia Media, said this was an “age of anxiety, due to VUCA (volatility, uncertainty, complexity and ambiguity)”.

“On the one hand, economic growth in financial markets like the US are doing pretty well, at record levels even, and unemployment is in multi-decade lows. In terms of monetary policies, interest rates are virtually zero in most advanced economies around the world. Yet on the other hand, there is a lot of uncertainty around the world,” he said.

Closer to home, prolonged demonstrations in Hong Kong are hurting regional economic performance.

Staples highlighted that global GDP had slowed to 2.3 per cent in 2019, down from 2.8 per cent last year, with Brexit hurting investment confidence and Germany flirting with recession. “Global trade (in 2019) is expected to post some of the lowest growth rates we’ve seen in the past 11, 12 years since the global financial crises of 2007 and 2008,” he said.

Amid the dreary outlook, Staples offered a sliver of hope through data that pointed to continued economic growth in Asia, albeit at a slow pace for some markets.
India is expected to post stronger year-on-year GDP growth in 2020 at 6.7 per cent; while China (six per cent), South-east Asia (4.3 per cent) and Japan (0.4 per cent) are expected to see slower advancement.

Within South-east Asia, Myanmar (7.1 per cent), Laos (6.5 per cent) are expected to put in the strongest GDP performance, while Singapore (1.2 per cent) and Brunei (1.5 per cent) will see slight year-on-year improvements. Malaysia and Indonesia are expected to maintain their GDP growth at 4.4 per cent and 5.1 per cent, respectively. Thailand (2.1 per cent), Cambodia (6.4 per cent), Vietnam (6.5 per cent) and the Philippines (5.2 per cent) will see slower year-on-year GDP growth.

Staples concluded: “You (tourism players) are in a really good sector. All the predicted drivers of growth – emerging economies, growing affluence, greater adoption of technology – are in your favour.”

Hopeful data
Jameson Wong, Asia-Pacific business development director of global travel intelligence agency ForwardKeys, agreed that the outlook for Asia’s tourism industry is still bright.
“Asian economies are still performing and there is growing affluence (in the region). At the same time, low-cost carriers (LCCs) are expanding in Asia along with an Internet proliferation which has made travel purchase far more accessible to everyone. These factors are feeding tourism growth,” said Wong.

ForwardKeys data has recorded growth of at least 12 per cent in travel bookings issued for the period November 2019 to April 2020 for all countries, with the exception of Hong Kong and Sri Lanka. Vietnam sees the strongest forward inbound booking growth at 33 per cent, followed by Japan at 27 per cent.

“We do not foresee a decline in these numbers, as many countries are stepping up promotions and opening up new destinations for tourism. For cost-conscious travellers, Asia is always a more affordable option than longhaul destinations. Furthermore, regional business travel will remain fairly constant,” he added.

Wong believes Asian businesses will continue to be a major driver of tourism traffic in the region.

“Asia sees a lot of intra-regional business travel. Business trips have to be made in good times or bad, although companies will relook their way of travel. In the event that business class and full-service airlines are cut, this region has many LCC options to keep people flying,” he said, adding that intra-Asia travel takes up approximately 65 per cent market share of global travel annually.

Corporate meetings and events specialists are also maintaining an air of optimism around performance in this segment for 2020.

The 2020 Global Meetings and Events Forecast, published in September 2019 by American Express Meetings & Events, found that meeting professionals are bullish about 2020, as steady growth across all meeting types is predicted for the fifth consecutive year.

Total meeting spend for 2020 is expected to rise by 1.3 per cent in Asia-Pacific, with respondents here saying they plan to do more with less in the region, while always keeping the attendee experience in central focus. Client/customer advisory board meetings and conferences/tradeshows are expected to be held most frequently in the new year, with a 2.3 per cent and two per cent growth respectively over 2019. The number of incentives/special events are only expected to grow nearly one per cent in 2020.

CWT Meetings & Events’ 2020 Future Trends Report has projected an eight per cent growth in the US$840 billion meetings industry in 2020 despite geopolitical and economic headwinds.

“All the predicted drivers of growth are in your (tourism players’) favour.”

Andrew Staples
Global editorial director, Economist Corporate
Network, The Economist Intelligence Unit

Right attitude
Asian business event leaders emphasised that an ability to adapt quickly to challenges and see opportunities in obstacles will tide businesses through.

Antonio Codinach, regional business director Asia Pacific, at Professional Convention Management Association (PCMA), encouraged optimism among his industry peers. He said: “We are the most agile, fastest-growing region in the world. This is also a region that is the most stable and where opportunities are.”

Codinach said one’s attitude will shape one’s reaction to the projected future. “So, I choose to see the future with positive eyes. We need to be agile and adaptable to changes, and make a commitment to the industry or the destination we represent.”

Also upbeat about the future is Bruno Simões, managing director of DOC DMC Macau & Hong Kong, despite describing his business as being “in a situation” now, hurt by the social unrest in Hong Kong and soft event spend in major market China which is “locked in a trade stand-off with the US”.

His confidence is fuelled by his observation that “most corporate clients are ready for events and many associations are ready to grow (in this region)”.

He said: “Across the years, Asia’s business events industry has proven to be (strong in the face of technology disruption and crises). Hong Kong will recover very quickly, as she has done in previous crises.”

Jason Teh, managing director of Pico Malaysia, is optimistic too, due to a string of mega events happening around the world in 2020 and which Pico Group is involved in. “Most of our corporate clients are spending a bit more in the coming months. Business events is part of marketing, which will go on no matter the state of the economy,” explained Teh.

Business leaders were unanimous in the belief that the ability to turn a challenge into an opportunity will allow businesses to come up victorious.

Citing an example, Prashant Yadav, CEO, Liberty International India, said his company – which typically delivers outbound Indian events – moved swiftly to support Indian companies that have chosen to keep their events on home ground against a backdrop of a soft Indian economic growth.

“At least five companies that usually do annual incentives for 600 to 1,000 people to longhaul destinations chose to stay in the country. We turned the reluctance to leave India into a business opportunity for us and for India,” shared Yadav.

He added that some clients were also quick to capitalise on destinations in turmoil, when tourism products were offered at the best value for money.

For Simões, a business slowdown presents the opportunity to “do things we never had time to do because work in events is intensive”.

“So, now is the time for us to sharpen our weapons. There are constant challenges to business – technology disruption, talent crunch, etc. When you are busy delivering events, you barely have time to stop and think about how to deal with these problems. This is now the best time to stop, look at what competitors and peers are doing, draw up an agenda to take the business forward, and learn,” he elaborated. – Additional reporting by S Puvaneswary