Eurozone tourism to enjoy a strong year despite high inflation

Despite headwinds to the eurozone economy, the tourism sector continues to shine bright. Our high-frequency Tourism Tracker suggests overnight stays in May have recovered to pre-pandemic levels, pointing to a strong high season that should add a sizeable boost to tourism-oriented southern economies. This brings some upside to an otherwise negative risk skew in the eurozone.

What you will learn:

• For now, pent-up demand for travel among households after two years of pandemic seems to be trumping the cost-of-living crisis, tallying with our expectation of a rotation in spending away from goods to services in 2022.
• But while tourism is doing well, high-frequency data also point to slowing demand for other services.
• Combined with the downbeat consumer sentiment, this suggests households are prioritising holiday spending at the expense of other expenditure.