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Aus tourism exports lift as Asia gets richer

Resources have long been Australia’s largest export but, services are becoming increasingly important. Service exports have surged in recent years, with a large part of this growth coming from tourism

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Pic: Tourists at the Sydney Opera House

Tourism exports, which include spending from short-term visitors, employee visitors and international students, have almost doubled since 2012 and currently account for over $A65 billion of Australia’s gross domestic product (GDP). 

"China is not only the main destination for Australia’s resources, but it is also the biggest source of our international tourists, with more than 120,000 visitors each month.”

The growth in the value of international tourism over the last five years has even outstripped growth in iron ore exports over the same period.

Growing rapidly

China is not only the main destination for Australia’s resources, it is also the biggest source of our international tourists, with more than 120,000 visitors each month.

The rise in Chinese tourist numbers over the last three decades has corresponded with the rapid economic growth of China and the expansion of the middle class.

With the middle class estimated to increase by 370 million by 2030, ANZ Research sees the Chinese tourist market as a continuing opportunity for growth.

Indian tourism in Australia has also grown rapidly, in line with the country’s growing middle class. Japanese tourism to Australia, on the other hand, has been a story of resurgence. After being the largest source of tourists to Australia in the 1990s, visits took a dive, bottoming in 2009 and stagnating for several years before recovering dramatically in 2015.

Strong growth, but slowing

Australia’s international visitor expenditure has, over the last five years, grown at an average annual rate of around 9 per cent and outpaced the growth in nominal domestic consumption over the same period.

Of the international visitor expenditure, most now comes from Asia. That proportion has grown from 45 per cent in the year to June 2009 to 64 per cent in the year to June 2019.

Visitors from China, India and Japan have been the main contributors to this growth, spending 10.9 per cent more in the year to June 2019 than in the previous year. This is considerably above the total visitor expenditure spent in Australia from Asian countries, which grew by 7 per cent in the last year.

However, it’s important to keep international spending in context: it only represents about 26 per cent of total tourism expenditure in Australia. Domestic tourism spending is still the dominant component of overall tourism-related spending in Australia.

Adelaide Timbrell and Hayden Dimes are Economists and David Plank is Head of Australian Economics at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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