Air travel growth trend suggests that there is no imminent global recession.
There are rising concerns over the global economic slowdown and the dreaded 'Recession' word, but Maybank Kim Eng has different view. By looking at the air traffic growth recently, the team lead by analyst Monshin Aziz, is quick to conclude that there is no imminent threat of a global recession.
According to Aziz, there is an innate correlation between air travel growth and GDP and there is no lag effect in consumer behavior. Majority of air travel is premised on the health of consumers’ pockets and their willingness to spend. Therefore, air travel growth figures provide an accurate assessment of consumer behavior.
"The current air traffic growth momentum has never been better, with above historical average growth rates and record load factors. The growth trend and customer behavior (passengers normally purchase their tickets 1.0-1.5 months ahead of travel date) suggest that the underlying real economy is okay and there are no imminent signs of a global recession," he claimed.
Air traffic growth, he added, has been a reliable forward indicator of upcoming global recessions for the past two decades. It triggered alarm bells two months ahead of the global financial crisis (GFC) and five months ahead of the 1997 Asian Financial crisis.
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