Turkey's Economy Hit By Declining Tourism
IMF News, February 23, 2017
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- Authors: Declining Tourism
- Published: February 23, 2017
Overview
- Turkey’s previously booming tourism sector was gravely hit in the wake of a series of terrorist attacks and domestic political turmoil.
- The dwindling number of visitors "chopped off about one percentage point of GDP from the country’s growth in 2016," according to a recent IMF study.
Scale and economic impact
- Tourism revenues were equivalent to 3.7 percent of GDP.
- Tourism directly generated 600,000 jobs, or 2.3 percent of total employment.
- An additional 1,000,000 jobs sprang up in related sectors, including restaurants and leisure industries.
- A 10 percent decline in foreign arrivals translates into a 0.3–0.5 percent fall in GDP (staff estimates).
- The decline in tourism reduced growth by about one percentage point of GDP in 2016.
Causes of the downturn
- Sharp rise in terrorist attacks and political uncertainty in 2016.
- Terrorist attacks: 400 in just 2015 versus an average of 70 annually between 2010 and 2014.
- More than 30 percent fall in the number of European tourists, who used to make up over half of visitors.
- Dramatic reduction in Russian tourists due to sanctions, including restrictions on charter flights and sales of travel packages.
Sectoral effects
- Beyond hotels, restaurants, and transportation, affected industries include:
- Telecommunications
- Retail trade
- Textiles
- Studies indicate recovery is likely to be slow because repeated incidents of violence tend to have long-lasting effects on tourist arrivals.
Historical factors that supported tourism growth before the downturn
- Expansion factors prior to 2016:
- Growing network of the national air carrier
- Infrastructure development
- Hotel construction
- Country marketing
- Visa facilitation: only 3 percent of foreign tourists needed visas, helping divert visitors from competitors in the Mediterranean, such as Egypt.
IMF Country Focus — February 23, 2017.
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