The effect of global volatility, uncertainty and geopolitical risk factors on international tourist arrivals in Asia

Abstract

The major tourist destinations in the Asian region are promoting and maintaining a conducive tourism environment. The susceptibility of the major tourist destinations in Asia, the uncertainties may encumber the arrival of international tourists. However, to the best of our understanding, the research in this area is scant. Further though the tourism-uncertainty nexus has been widely explored in the literature, the deliberations in a time-varying and frequency-domain framework continue to be ignored. Thus, building upon the earlier deficiencies this study investigates in a time and scale-varying framework the tourism uncertainty/risk nexus for Singapore and Malaysia is one of the two major tourist destinations in the Asian region. This article endeavors to investigate the role of world policy uncertainty, US Monetary Policy Uncertainty, geopolitical risk, Global Financial Stress Index and market volatility on international tourist arrivals in Malaysia and Singapore. To the best of our understanding, this study is the foremost to scrutinize the interrelatedness between these variables in a multivariate wavelet causality framework, from January 2000 to April 2020. Our results show that global uncertainties manifested through different macro-based indicators affect international tourism demand for the destination countries. During the subprime crisis, Euro-crisis and the pandemics significant coherencies are perceivable. The major empirical findings of the impact of uncertainty indicators and geopolitical risk on international tourist arrivals over the recent period have important implications for policy makers and practitioners.