How will China's lifting of group travel ban affect Korea's GDP?

Passengers at the arrival hall of Incheon International Airport, west of Seoul. (Yonhap)

China’s lifting of group tours to South Korea is estimated to lead to 800,000 more travelers and raise Korea’s gross domestic product by 0.06 percent this year, the Bank of Korea said Friday.

The resumption of group tours is expected to have a significant impact on the recovery of Chinese tourists visiting Korea, considering that about 40 percent of all Chinese tourists were group tourists before the restrictions were put in place, according to an economic outlook report released by Korea's central bank.

On Aug. 10, China's tourism authorities decided to lift the ban on group tours to South Korea, ending a six-year hiatus caused by frayed relations following the deployment of a US defense system to Korean soil.

“Since the Chinese government announced the resumption of group tours, there have been positive signs. Major Chinese travel agencies have launched group tour programs and schedules for cruise ships to make port calls in Jeju Island, which have been fully booked until March next year,” the BOK said.

The BOK projected that some 2.2 million Chinese tourists will visit Korea between July and December this year. An additional 800,000 people were added to the estimate due to the resumption of group tours.

In the fourth quarter of this year, the number of Chinese tourists who visited Korea is expected to reach 85 percent of pre-pandemic levels in 2019, marking a big jump from 46 percent logged in July.

“The number of Chinese tourists will begin a full-fledged recovery during the National Day holiday, one of China's three major holidays.” China's National Day holiday falls between Sept. 29 and Oct. 6.

The additional 800,000 Chinese tourists are projected to contribute to the country’s GDP. Factoring in the projection, the BOK maintained its growth forecast for this year at 1.4 percent on Thursday.

Given that the number of visitors to Singapore has been recovering faster than those recorded by Thailand, although the ban was lifted for both countries simultaneously, China’s outbound trips appear to have been made by upper-income classes, the report said.

“Looking at the recovery case of Singapore, which has a similar travel purpose, consumption infrastructure, and per capita expenditure to Korea, it seems that there is room for more high-income Chinese tourists to enter Korea,” it said.