In case you do not know the details behind the mysterious disappearance of Flight 370, an airplane that started from Kuala Lumpur, Malaysia, and was supposed to land in Beijing, China. However, air traffic control lost connection with the flight, and it mysteriously disappeared, with most people believing it crashed in the Indian Ocean in between China, Indonesia, and Australia.
Many people have criticized the way the Malaysian government has handled the situation, due to revealing information very slowly, and sometimes falsely, as well as being defensive when they should've been accommodating. In addition, there were two passengers with stolen passports on Flight 370, and with the confusion of the plane's trajectory, the question now is how much has this crisis influenced the Malaysian economy.
According to a survey done by WSJ Asia, Flight 370 has influenced 77% of people on whether or not they'll visit Malaysia, with 18% saying they weren't influenced, and 5% saying they were not sure. This could be a huge blow to Malaysia, because tourism is the 6th largest contributor to the economy. The country was planning on increasing tourist numbers from 25.7 to 28 million during 2014, including a growth of Australian tourism from 500,000 to 620,000. The highly anticipated "Visit Malaysia 2014" has been cancelled by the country as well.
Tourism contributes approximately $15 billion (USD) to the country's gross domestic product, approximately 5.3% of the country's total GDP, improving from 4.7% in 2011. Tourism also provided 16.4 % of Malaysia's employment in 2012. With the effects of the disappearance of Flight 370, it could devastatingly not only impact Malaysia Airlines, but the country itself.
With less tourism, Malaysian companies would make less profit, and more people would become unemployed. Companies could be seen relocating to other countries where tourism thrives more. To make up for less profit, companies that stay in Malaysia would have to raise prices, which lowers the value of the dollar, causing inflation. Needless to say, a recession could be in the works in Malaysia, and it all started with the disappearance of Flight 370.
Unemployment was only 3.4% in Malaysia in 2012, which is low by global standards. However, this number has risen in recent months, due to the current administration not creating any "difficult, dirty, or dangerous" jobs in sectors like construction safe or more profitable, but instead importing workers to do the jobs instead. Flight 370 might exponentially increase unemployment for Malaysia in the next coming months, too.
http://qz.com/192630/the-missing-malaysia-airlines-flight-threatens-a-crucial-engine-of-the-countrys-economy/
http://www.news.com.au/travel/travel-updates/how-the-fallout-from-missing-malaysia-airlines-flight-mh370-will-impact-on-the-whole-country/story-fnizu68q-1226866415896
Do you think that it will hurt it in the long run or just in the short run, with this being a very unusual event that took place?
ReplyDeleteIf the Malaysian economy is affected negatively by the Flight 370 incident, I think that it will be hurt in the short run and there will not be many affects in the long run. The Malaysian airlines will be the most affected and, due to the negative feedback on the way the Malaysian government handled the situation, tourism will probably be strongly affected as well, especially in the short run. Since tourism is a large contributor to Malaysian's GDP, the Malaysian economy may suffer in the short run.
ReplyDeleteI believe this will hurt the tourism in Malaysia. The disappearance of this plane will hurt the economy greatly until the plane or remains are found and eventually the whole story is uncovered. Until then i do think the economy will be hurt by this and will continue to be affected for a couple of years after the situation is done and handled. But this could be a major problem for Malaysia
ReplyDeleteIt will affect tourism. Malaysian airlines is owned by the state, and what seemed to me to be a poorly handed situation only made things worse. However there are other airlines people can fly in Asia that have better track records. But i also agree this punch to their economy will only be a short run problem. Hopefully the plane is found so family members can get some sort of closure.
ReplyDeleteIt's really interesting to see how this current event is making a difference in the Malaysian economy and especially in their reputation as a whole. I think that it will hurt the country in the short run, but not in the long run. However, if this is an issue that is prolonged, then it could have long-term problems for the country.
ReplyDelete