11:34:08 AM | 12/28/2023
According to “Economic Outlook: Balancing Prices & Priorities” released by the Mastercard Economics Institute, while there is no one-size-fits-all story for the Asia Pacific region, the macro picture of 2024 is expected to experience modest growth, largely on par with 2023 levels, as economies continue to stabilize and key drivers of growth, like exports and tourism, edge closer to pre-pandemic norms.
As per a recent projection, the tourism and entertainment sector is anticipated to witness a surge in expenditures in the year 2024. In the photo: the renowned Tra Su cajuput forest eco-tourism area in An Giang province, a favored destination for both local and international tourists
Drilling down into individual economies, growth expectations are mixed across the region. On one end of the spectrum, Singapore, Malaysia, the Philippines, Thailand, Taiwan (China), and South Korea should see upticks while slowdowns are anticipated in Australia, the Chinese Mainland, Japan and New Zealand. India and Indonesia are expected to hold largely steady at 2023 levels.
Anticipated spending shifts
As the economic ripple effects of the pandemic subside in 2024, Asia Pacific consumers should be able to allocate a larger share of their wallets to discretionary spend such as travel and entertainment. This is in comparison to 2022-2023, years marked by high inflation, that caused essentials like groceries and fuel to take up a larger percentage of household budgets, leaving less money left over for ‘wants’ or extras.
“2024 is set to be a year of recalibration as consumers rebalance their wallets. And what the data shows is that people remain eager to travel and dine out, although levels vary from market to market,” said David Mann, Chief Economist, Asia Pacific, Mastercard. “Amidst this disorienting global backdrop, the Mastercard Economics Institute helps clients to translate macroeconomic forces down to the country, category, and even company levels, in addition to counseling on possible scenarios and the implications they would have on demand.”
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The addition of more countries to China’s approved list for group travel, which typically have less stringent visa restrictions compared to individual travel, will continue to support overseas tourism spending. The recovery of specific corridors will hinge on the authorities’ prioritization of flight capacity allocation. While Southeast Asia destinations such as Singapore, Malaysia, Vietnam and Thailand were early outperformers in 2023, it is expected that destinations in Northeast Asia, North America and Europe should catch up in 2024. |
Signifying another shift in demand, in 2024, consumers across Asia Pacific are expected to spend more on goods than they did in 2023. This marks the start of a new cycle that will see growth rates for goods rebounding to pre-pandemic levels, reversing the 2022-2023 trend that saw consumers prioritizing key ‘out-and-about’ services such as dining and ‘revenge’ travel as economies re-opened post-pandemic.
In 2024, the rising demand for goods, such as household items and clothing, is also expected to resuscitate the Asia Pacific manufacturing sector, which plays a crucial role in the global economy. This shift will drive a convergence in performance between the manufacturing and services sectors in the region which trended in opposite directions as manufacturing lagged and services boomed in 2023.
Source: Vietnam Business Forum
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