New data from the Institute of International Finance shows what we suspected. The pandemic has devastated the travel sector in emerging markets whose economies are dependent on that spending.
The coronavirus crisis decimated tourism in developing countries such as the Dominican Republic, Turkey, Vietnam and Cambodia in the first half of the year, battering a sector vital to many developing economies, high frequency data showed.
Countries around the world shuttered their economies and imposed travel restrictions earlier this year to halt the spread of the coronavirus which has killed more than 578,000 people.
“COVID-19 and the lockdown measures introduced to address the public health crisis present an unprecedented challenge, as an almost complete collapse of international travel and tourism has taken place since late in 2020 Q1,” Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF) said in a report on Wednesday.
Tourist arrivals tumbled by nearly 100% in the Dominican Republic and Turkey in May, while Vietnam suffered a similar wipe-out in June and Cambodia in April, the IIF report found.
Smaller countries such as Cambodia, Georgia or Croatia felt the hit especially keenly, as international tourism receipts account for more than a fifth of their gross domestic product, the IIF said.
While many countries have begun emerging from lockdown in recent weeks, a recovery of tourism might be some time off and gradual as travel restrictions remain in place in more than 150 countries.
Many airline fleets are largely grounded and cruises effectively shut down in many places.
Furthermore, consumer behaviour has changed in the wake of the pandemic, the IIF said.
A baseline scenario which predicts a gradual recovery with international arrivals reaching half of last year’s total by the end of 2020 would still translate into a decline of two-thirds over the year.
“A full recovery will likely take more than two years, and a second wave of lockdowns in tourist-generating countries could make matters worse,” Ribakova said.
(Reporting by Karin Strohecker; Editing by Catherine Evans)
Copyright (2020) Thomson Reuters. Click for restrictions
Photo credit: A woman wearing a protective mask carries glasses of fruit juice by the swimming pool after the Government eased the nationwide lockdown following the coronavirus disease outbreak, at the Sofitel Legend Metropole, which was the venue of the February 2019 Trump-Kim summit, in Hanoi, Vietnam June 26, 2020. Reuters