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Tourism in the Post-Pandemic World Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere

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Tourism in the Post-Pandemic World Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere

Country: International
Language: English
Year: 2021
Pages 115
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Publication Author
International Monetary Fund (IMF)

Description
The COVID-19 pandemic, a global crisis like no other in modern history, has led to a sudden stop in travel and a collapse in economic activity worldwide. A major economic driver, tourism accounts for more than 10 percent of the global economy and in many countries a large share of exports and foreign exchange earnings. The industry is also highly interconnected; multiple sectors are dependent on its performance. The pandemic has had severe repercussions on the complex global tourism supply chain, putting millions of tourism jobs at risk. Informal and migrant workers, particularly women and youth, have suffered disproportionately from diminished employment opportunities and lack of access to social safety nets, leading to increased poverty and slowing progress toward the UN Sustainable Development Goals.

This departmental paper analyzes the impact of the COVID-19 pandemic on tourism in the Asia Pacific region, Latin America, and Caribbean countries. Many tourism dependent economies in these regions, including small states in the Pacific and the Caribbean, entered the pandemic with limited fiscal space, inadequate external buffers, and foreign exchange revenues extremely concentrated in tourism. The empirical analysis leverages on an augmented gravity model to draw lessons from past epidemics and finds that the impact of infectious diseases on tourism flows is much greater in developing countries than in advanced economies. Given the unprecedented nature of the COVID-19 crisis, forward looking model simulation results for tourism dependent economies show scope for a faster recovery, if rapid advancements in vaccine distribution were to bring back travel to pre-pandemic levels, but also significant downside risks from protracted uncertainty and limited vaccine effectiveness and availability, with deep and long-term scarring effects potentially amplifying existing vulnerabilities.

Tags: International Monetary Fund (IMF), international tourism, recovery strategy, Tourism, tourism recovery

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