The Impact of Geopolitical Risk, World Economic Policy Uncertainty on Tourism Demand: Evidence from Malaysia

The tourism industry is a significant factor in developing countries economies. Developed and developing economies have witnessed growth in the tourism industry in the last two decades. The tourism industry has many advantages for a country, including increased employment opportunities, tax revenues, income earnings, and foreign exchange reserves; thus, it has become an important sector for economic development worldwide. The present paper aims to apply the Wavelet coherence (WC) method to study the effects of world economic policy uncertainties (WEPU) and geopolitical risks (GPR) on the tourist arrivals in Malaysia from 2000M1 to 2019M7. The obtained results show the stronger coherency of GPR compared to that of EPU and also indicate that GPR has long-run implications. In contrast, EPU has short-run influences on tourist arrivals. Therefore, the government must take necessary actions and measures to ensure international harmony, national security, and public protection against such unpleasant events.