Tourism is one of Australia’s biggest service export earners. It’s also a primary beneficiary of the falling Aussie dollar.
The theory goes that when the Aussie dollar falls, it encourages more tourists to visit Australia while at the same time discouraging, or at least slowing the growth of, Australians heading off for overseas holidays.
One-half of that equation is clearly happening with data released by the ABS today showing that, in trend terms, overseas short-term arrivals in January were the highest on record with a print of 584,800. On a rolling 12-month basis, total visitor arrivals were 6.9132m, a record high.
That in itself is good news.
As it stands, there’s more Aussie tourists spending overseas than foreign tourists spending here in Australia. So if the net of short-term arrivals less short-term departures reduces, the reality is the economy here benefits.
It’s clear the the falling Aussie dollar doing its job. At least at the margin.
The correlation is clear between net arrivals and the Aussie dollar for the past 20 years, so it is reasonable to expect that some of the gap will close and more Australians will holiday at home while more foreigners will come to visit.
But it’s probably unreasonable to assume the full reversal that the current Aussie dollar level predicts – Fiji and Bali are just too close and too cheap.