The ECB warns that tourism puts the brakes on the rise in energy prices


The recovery of tourism puts the brakes on in the euro zone due to the rise in energy prices, which is translating into higher costs for the sector. The warning was made this Monday by the European Central Bank (ECB), which observes how the recovery of tourism is slowing down due to the sharp increase in prices, especially due to the increase in energy.

According to Tobias Schuler, Hannah-Maria Hildenbrand and Martina di Sano, economists at the entity “the strong dynamics in the tourism and leisure sector observed in spring and summer have begun to weakenBoth highlight the relevance of reservation data as a future indicator of activity and prices, since they show the information one to two months in advance.

“As the tourism and leisure sector gradually opened up in the euro area after the various waves of covid-19, cost pressures from input prices and the exceptionally strong recovery in demand have increased”. Now, energy is the main factor that has triggered prices in tourism.

The ECB economists forecast that the demand for tourism and leisure services will weaken in the coming months by context of uncertainty in which travel demand and real income are expected to fall and prices will increase.

The indicators they use peaked in May and have since fallen in line with expectations of lower demand from travel agencies. Therefore, prices in the tourism sector may gradually stabilize at a high level.

Rising inflation combined with weak growth

In its last economic bulletin, the entity already pointed out that, looking to the future, there are clear signs of a continued slowdown in economic activity against a background of high inflation and persistent uncertainty related to the war in Ukraine and energy-related events. Incoming survey data points to a downward growth momentum affecting all sectors of the economy in the third quarter of 2022.

The GDP of the countries that share a currency barely increased by 0.2% in the third quarter, in a context of constant price escalation. The annual rate of the CPI hit a new high in October at 10.7%, its highest level since the creation of the common currency. The recession could be closer, as organizations such as the International Monetary Fund, the OECD or the European Central Bank itself warn.


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