Here's one example of how a stronger currency could thwart Australia's economic recovery

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International visitor arrivals to Australia continue to surge despite the stronger Australian dollar.

However, there are signs that it may be starting to have an impact.

According to data released by the Australian Bureau of Statistics (ABS), total short-term visitor arrivals jumped by 2.4% to 787,800 in July in seasonally adjusted terms, the second-highest level on record.

In cumulative terms, total short-term arrivals over the year rose to 9.3199 million, the highest level on record. That was up 9.1% on the level reported in the year to July 2016.

While all bullish numbers, as seen in the chart below, it looks like the higher Australian dollar may be starting to weigh on total growth in annual visitor arrival numbers, even though it remains elevated compared to historic norms.

It will be interesting to see whether this trend continues given the strength of the Aussie in recent months, particularly as the RBA has warned previously that continued strength could “complicate” Australia’s fledgling economic recovery.

By country of departure, the number of Chinese citizens who arrived in July jumped by 7.4% to 126,300 in seasonally adjusted terms. Not only was that a record high, but also up a massive 24.8% on the levels of a year earlier.

In comparison, visitors from New Zealand — now Australia’s second-largest source of international arrivals on a monthly basis — rose by 2% to 115,100, an increase of 2.7% on a year earlier.

Arrivals from the United States also put in a strong showing, rising 11.4% over the year to 67,500.

Arrivals from the UK, Australia’s fourth largest market, fell by 6.4% to 56,700, down 4.8% on the levels reported in July 2016.

That may reflect the impact of Brexit on the pound, or it could be a sign that many are already planning to holiday in Australia for this summer’s Ashes series.

In terms of total arrivals over the year, those from China surged to 1.307 million, up 10.8%, or 127,200, on the number reported in the year to July 2016.

That too was a record high, and up 284%, or 967,000, on the levels of a decade earlier.

Arrivals from the United States increased by 14.4%, or 97,100, to 770,500 over the year.

Combined, arrivals from China and the Unites States accounted for just under 30% of total growth recorded over the year.

At 1.3529 million, New Zealand remained Australia’s largest source of visitor arrivals on an annualised basis, growing by 28,900, or 2.2%, from the levels of a year earlier.

However, given the current growth trajectory between the two nations, China looks set to displace New Zealand for that title too in the months ahead.

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