Amid Germany's economic stagnancy, France is poised for a record year in international tourist spending, providing a boost to the euro zone's outlook.
France is set to see a record sum of international tourist spending this year, a bright spot in the euro zone’s economy which is already burdened by Germany’s stagnancy.
The French tourism ministry on Tuesday projected expenditure by overseas tourists would reach €64 -€67 billion in 2023 after a strong summer season, even the number of international arrivals is yet to top the pre-pandemic level.
France is one of the most visited countries in the world. The industry accounted for 8% of GDP last year. The 2024 Paris Olympic Games are expected to give another boost.
Accommodation prices for the Île-de-France region around Paris will increase 85% during the event, according to Deloitte.
Also other popular destinations in Europe are seeing strong rebound after three years of travel restrictions. Early bookings suggest Italy, Spain, Greece and Portugal could receive record tourism revenues this year.
Consumers who had little choice but to buy goods rather than services during the pandemic are now keen to catch up on lost time, some in the industry say.
Now the ECB are becoming concerned that a fresh wave of summer inflation spurred by tourism could complicate their efforts to keep prices under control.
Ongoing tourism boom feeds into service inflation, a key driver of the central bank’s preferred price gauge, which is now at an all-time high of 5.6%.
Fabio Panetta, a member of the ECB executive board, pinned the blame for the latest rise in services prices on ‘robust’ spending on holidays and travel.
Airports Council International Europe shows more visitors are arriving from outside Europe. Those long-distance flyers tend to spend a lot more than local counterparts once they arrive.
The ECB president Christine Lagarde said in Friday that interest rates in the EU will stay high ‘as long as necessary’ to tame stubbornly high inflation.
But she steered clear of likely policy decision at its next meeting in September. Many analysts expect it to skip a rate hike given bleaker economic outlook.
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