By Youri Kemp From Caribbean News Now

VIRGINIA, USA — The Global Business Travel Association (GBTA), along with Carlson Wagonlit Travel (CWT), has produced its annual Global Travel forecast for 2019, highlighting several key factors that they estimate will shape the global economic environment for travel in 2019.

The report notes first that one of the key risks to global economic recovery is the rise of protectionist policies and the prospect of stoking trade wars around the world.

The report acknowledged that, while global trade has finally recovered to near pre-2008 levels, and is a key driver of corporate travel, any policy aimed at protectionism, or reducing the level of global trade and cooperation, will have a detrimental impact on the demand for global business travel.

Earlier in June 2018, US President Donald Trump made good on his campaign promise of getting “tougher” on trade with China, by pledging to raise tariffs by up to ten percent on some US$200 billion worth of Chinese goods; and additional 35 percent of tariffs on another US$50 billion worth of Chinese goods, all of which are subject to an August, 2018 review for implementation or amendment or cancellation.

China then responded with promising to raise tariffs up to 25 percent on some $34 billion worth of American-made goods, targeted directly as US farm products – with the farmers being a key voting bloc and demographic for President Trump.

US trade with the European Union (EU) has also been met with friction, with the US threatening to impose stricter trade sanctions on the EU, prompting the EU to make a counter-threat to the US in return.

EU and US officials met last week to discuss a halt to the trade war escalation, with the possibility of moving to “zero tariffs” on all goods between the parties being the primary goal over the course of the negotiations.

The GBTA report also indicated caution on a weaker than normal US dollar and it is expecting “the US dollar to weaken against other major currencies on a trade-weighted basis in 2019. This weakening represents a trend reversal from recent years, and such a reversal has obvious implications for the relative prices of travel commodities, both for US travel managers managing travel abroad, and also for travel managers for non-US corporations sourcing travel in the North American market. We expect the euro to gain 4.8% against the US dollar in 2019, which translates into a 4.8% increase in the purchasing power for Europeans in the US.”

US Federal Funds rate has risen steadily from 2016 from 0.5 percent to 2 percent, with the US Federal Reserve indicating in several pronouncements that a continual rise in interest rates is highly likely, considering the strengthening in the US economy, bolstered by higher employment and business growth in addition to high-volume trading in the US stock-market.

The US dollar is trading at an average of 1.16 over the last six months versus the Euro, showing that, as US interest rates rose, power over the US dollar remained tame and has not gotten back to the highs of 2015 of 1.39.

The report also noted that there is a notable pilot shortage, as labour first exceeded fuel as an operating cost for airlines in 2016. The report noted that this was understandable, as oil prices dipped below US$30. However, despite the recovery in oil prices, labour versus fuel costs are estimated at 30.9 percent and 20.5 percent in 2018, respectively, according to a Reuters report, citing the International Air Transport Association (IATA).

Along with labour costs and the impending rise in oil prices, the GBTA noted that two factors will play a significant cost in mitigating against these costs: The rise in technology as it relates to travel logistics, and the rise in more efficient global transportation and the opening of new routes supplemented by an increase in air-transport companies and more effective mass-transportation services.

Also leading the way in technologizing mass-transportation vehicles like trains and large airplanes, the further domesticated edge that technology brings to consumers as handheld devices are forecasted to be fitted to suit any and all consumer tastes and preferences, from booking flights to arranging dinner plans in addition to biometrics to data for all passenger and consumers, to artificial intelligence responding to consumer issues over that of a physical person and the rise of blockchain technology and by extension, cryptography, to assist with reducing overhead costs for businesses in the travel sector by reducing the need for data-storage facilities.

For more on this story go to; https://wp.caribbeannewsnow.com/2018/07/29/global-travel-forecast-projects-higher-travel-costs/