Spending on business travel has been surging over the last year, but that updraft is threatened by potential trade wars and an economic slowdown in the next year, according to a forecast by the global trade group for corporate travel managers.
“The direction of trade policy is far and away the biggest wild card that could impact our forecast for global business, creating uncertainty that could derail the recovery,” said Michael McCormick, executive director and chief operating officer of the Global Business Travel Assn., whose 9,000 members manage more than $345 billion in annual corporate travel spending.
The association said in a report released last week that spending on business travel since the end of the economic recession has risen between 3% and 5% a year from 2012 to 2016. Spending increased 5.8% in 2017 over the previous year — to $1.33 trillion — and is expected to leap 7.1% in 2018.
The trade group attributes the growth to improving economies around the globe. But the organization predicts the travel improvement will be cut short by rising interest rates in the United States, growing budget deficits in “both developed and emerging markets,” and “rising protectionism sparking potential trade wars.”
There is a direct connection between global trade and the business travel that supports trade, the group said, adding that the potential for a trade war “is the biggest global risk that GBTA is watching.”
The report doesn’t identify the policies that it fears will lead to trade wars, but the Trump administration has been calling in recent months for tariffs on products from several countries, including China, Canada and Mexico. Those countries have threatened to retaliate with tariffs of their own.