As per the experts in JP Morgan, Australia’s economy will significantly boost by one percent for the next two coming years if China revises its Zero-Covid policy.
“China’s shift toward an earlier reopening raises the question of potential implications for the Australian economy,” Tom Kennedy, JPMorgan’s chief investment strategist stated in a report on Saturday.
Kennedy wrote in the reports stating the advantages if Beijing changes some of its stringent industrial policy,“The largest potential upside from reopening itself sits within the services sector given China is the largest consumer of Australian tourism and education exports.”
As per the firm, it anticipates that Australia’s tourism will fully recover adding 0.5 percentage points to its GDP and with the return of chinese students for further studies will further add 0.4 percentage. As a result roughly one percentage of economic boost will be added to the country’s economic growth.
Full tourism recovery with China
Although Australia revoked Covid-related travel ban in July last year, the level of tourists arriving is still less than what they were in the pre-pandemic era.
As per Australia Bureau of Statistics latest report, in October 2022 a total of 430,470 short term trips were made to Australia, which is almost 44% lower when compared to the same month in 2019 where roughly 1 million short-term trips were made.
The October report by ABS also revealed that mostly tourists came from New Zealand, the United Kingdom and the United States, Chinese tourists were nowhere to be seen in that list.
The report further revealed that roughly 15.3% of all the inbound tourism was made up of Chineses. Thus, Chinese made the largest mass of tourism and spent more than four times more than those tourists coming from New Zealand, which form the second-largest mass of inbound tourism to Australia.
“Our expectation is for the tourism-related consumption impulse to be spread over 2023 and 2024,” Kennedy drafted.
“While the duration adjusted spending numbers are less striking, real GDP is an aggregate concept and so the absence of Chinese tourism has been a notable headwind,” he stated.
Students from China
JPMorgan predicts that the number of international students are believed to accelerate this year.
As per the data released by the Australia’s Department of Education roughly 253,000 international students came from China from January to October 2019. However, that number fell to 173,000 in October 2022.
As per the latest data Chinese students make about 26% of the total enrollments of international students, thus forming a largest mass from a single country.
“If education exports to China revert to 2019 levels, the impulse to real GDP would total 0.4%-pts, a useful impulse in the environment of slowing household consumption though not a panacea to prevent a growth deceleration,” Kennedy further wrote.
- Published By Team Australia News