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Australia—Robust tourism supports continued services export growth
Australian services exports continued to perform well in Q4 2024, increasing by 4.6% or $1.4 billion, to $33.4 billion for the quarter, with travel contributing 29% of the increase. Growth in the value of inbound international tourism was robust, driven by higher spending as holidaymakers spent more and stayed longer. However, the figure hides a lacklustre recovery in international visitor arrivals, which remain 12% below pre-pandemic levels (Chart).
Globally, international tourism recovered close to pre-pandemic levels in 2024 with 1.4 billion overnight visits, but the recovery has been uneven. Patterns of travel appear to have changed structurally since the pandemic with stronger growth in domestic and within-region tourism. Airline capacity recovery is also uneven, with Europe and Latin America exceeding 2019 levels, but Asia (-23%), North America (-15%) and the Middle East (-24%) lagging. Australia’s international tourist source markets are also showing different patterns of recovery—arrivals from Korea, New Zealand, US, Southeast Asia, UK and Europe all exceed 85% of pre-pandemic levels, but arrivals from China remain below 60% of 2019-20 levels.
The outlook globally is positive, with UN Tourism expecting 3-5% growth in 2025 as traveller confidence returns and flight capacity increases. About 64% of the UN Tourism Panel of Experts indicate ‘better’ or ‘much better’ prospects for 2025 compared to 2024. However, global economic and geopolitical turbulence pose significant risks to the outlook. A strong US currency will support growth in US tourist spend and arrival numbers, but sluggish growth and renewed support for domestic tourism in China will further dampen recovery in Chinese tourist arrivals. China may also attract a larger share of the international tourism market if moves to increase visa-free entry arrangements translate into cost competitiveness and ease of travel.
