Holiday Euro Spring 2007: Holiday euro worth more overseas, less in neighbouring countries
- On the whole, unchanged from the previous year
- Stronger euro makes overseas destinations cheaper
- Inflation makes many European destinations permanently more expensive
On average, the holiday euro is worth as much abroad in spring 2007 as it was last year. However, the calculations of the Bank Austria Creditanstalt (BA-CA) economists show that there have been a number of changes in the price ratios. “The strong euro is making overseas destinations cheaper this year,” says Stefan Bruckbauer from BA-CA summing up the analyses, “however, at the same time, the value of the holiday euro in a number of European holiday destinations is being reduced by inflation rates which are in some cases higher than those in Austria.”
The holiday euro will probably be worth noticeably more in Japan, most other Asian countries and in the USA this year. The holiday euro has lost value considerably in Hungary.
Nevertheless, in the most popular holiday destinations for Austrians, the holiday euro is still worth most in Hungary at 147, after Turkey, despite having lost almost 10 percent since March last year due to higher inflation and a slight currency appreciation. In Turkey, the holiday euro is currently worth 164, an increase of 8 percent compared to the previous year. “Once again the devaluation in Turkey was stronger than inflation, increasing the value of the holiday euro,” said Bruckbauer.
Croatia remains in third place with regard to the value of the holiday euro in the most important holiday destinations for Austria with 139. This value has not changed since the previous year as the country has the same rate of inflation as Austria. Croatia is followed by the Czech Republic and Slovenia with the holiday euro declining in value somewhat in both countries.
The holiday euro has gained considerably in value in Asia and America, and at 121 the holiday euro is currently worth more in the USA than in Greece or Spain for example. Compared to the previous year, the holiday euro has gained 11 percent in the USA. Japan made the biggest gains in value with 12 percent, although at 98 the holiday euro is still worth less than in Austria. “The holiday euro is continuing to lose value in the two popular southern destinations Spain and Greece in 2007, with the higher inflation rate depressing the value by 1 to 2 percent per year,” said Stefan Bruckbauer.
Looking at the development of the holiday euro over a longer period it transpires that the value of the holiday euro has increased substantially in a five-year comparison due to the strength of the euro. Japan is now 50 percent and the USA 40 percent cheaper than five years ago. At the same time, the holiday euro is clearly losing value in the popular short-haul destinations due to the prevailing higher rates of inflation in these countries, losing most in Hungary (24 percent) and in Turkey (20 percent). The loss in value has been somewhat smaller, but nevertheless noticeable in Italy (-16 percent), in Spain (-12 percent) and in Greece (-10 percent). “Due to higher inflation, in a number of southern destinations the holiday euro is worth almost as much or less than in Austria, and as these countries have the euro this cannot be offset by depreciation. In contrast, depreciation could quickly make good the loss of value in Turkey or Hungary.
The BA-CA economists point out that these are average figures. Individual regions such as London as the central region can differ. The price level also refers only to the average for goods and services in the individual countries, individual products can differ considerably. Furthermore, the fact that the price level in a number of holiday destinations is much more favourable is mainly due to higher incomes in Austria. If the level of prices in Austria were lower, the income level would also be lower, and in many cases we would not even be able to afford holidays.
Enquiries: Bank Austria Creditanstalt Economics and Market Analysis
Stefan Bruckbauer, Tel. 05 05 05 EXT 41951