Economic Effects of the World Tourism Crisis on Australia

Within a context of uncertainty over travellers' security, tourism experienced two critical events in 2003 – the Iraq War and SARS. This paper explores the economic effects of the tourism crisis on Australia. While the events resulted in less inbound tourism, they also resulted in a reduction of outbound tourism. The net economic impacts on the nation depend on the extent to which cancelled or postponed outbound travel are allocated to savings, domestic tourism or the purchases of other goods and services. Using a computable general equilibrium model of the Australian economy, simulations of the impacts of the events suggest that the net effects are not as severe as might have been perceived by tourism stakeholders.