## Impact of the Pandemic on Tourism – IMF F&D ## Source details **Canonical URL:** [Impact of the Pandemic on Tourism – IMF F&D](https://www.imf.org/en/publications/fandd/issues/2020/12/impact-of-the-pandemic-on-tourism-behsudi) ## Other formats - [Markdown version](/en/publications/fandd/issues/2020/12/impact-of-the-pandemic-on-tourism-behsudi/index.md) - [Structured JSON version](/en/publications/fandd/issues/2020/12/impact-of-the-pandemic-on-tourism-behsudi/index.json) - [Bundle manifest](/en/publications/fandd/issues/2020/12/impact-of-the-pandemic-on-tourism-behsudi/bundle-manifest.json) ## Bibliographic details - Authors: ADAM BEHSUDI - Published: December 1, 2020 --- ### Scale of the shock to tourism - Before COVID-19, travel and tourism accounted for 10 percent of global GDP and more than 320 million jobs worldwide. - International travel growth: 25 million foreign trips in 1950; 1.5 billion in 2019. - The global pandemic put 100 million jobs at risk. - Women represent 54 percent of the tourism workforce (UNWTO). - Tourist arrivals fell globally by more than 65 percent in the first half of 2020, with a near halt since April — compared with 8 percent during the global financial crisis and 17 percent amid the SARS epidemic of 2003 (IMF ongoing research). - IMF October World Economic Outlook projection: the global economy would contract by 4.4 percent in 2020. ### Macroeconomic and employment impacts by region and economy - Real GDP declines in 2020 for tourism-dependent economies: - African countries dependent on tourism: shrink by 12 percent. - Tourism-dependent Caribbean nations: decline will reach 12 percent. - Pacific island nations such as Fiji: could see real GDP shrink by 21 percent. - Subnational and sectoral impacts: - In Hawaii, one in every six jobs vanished by August. - In Florida, tourism accounts for up to 15 percent of the state’s revenue; officials said it will take up to three years for the industry to recover. - Among G20 countries: - Hospitality and travel sectors make up 10 percent of employment and 9.5 percent of GDP on average. - GDP share reaches 14 percent or more in Italy, Mexico, and Spain. - A six-month disruption could directly reduce GDP between 2.5 percent and 3.5 percent across all G20 countries (IMF paper). ### Fiscal and policy responses to manage the revenue gap - Examples of fiscal support and adjustments: - Barbados: IMF augmented its Extended Fund Facility program by about $90 million, or about 2 percent of GDP, to help finance the emerging fiscal deficit caused by plummeting tourism revenues and increased COVID-related expenditures. - Seychelles: entered crisis from position of fiscal strength but will be challenged to return to medium-term fiscal sustainability without significant support. - Typical policy measures deployed worldwide: - Cash transfers, grants, tax relief, payroll support, loan guarantees, halting loan repayments in some cases. - Targeted support to informal workers concentrated in the tourism sector. - Private-sector and consultancy recommendations: - McKinsey & Company analysis of stimulus across 24 economies: $100 billion in direct aid to the tourism industry and $300 billion in aid across other sectors with significant involvement in tourism. - McKinsey recommends experimenting with financing mechanisms such as revenue-sharing among competing hotels and government-backed equity funds for tourism-related businesses. ### Development challenges and medium-term structural considerations - Tourism as a development pathway: - In sub-Saharan Africa, tourism-dependent countries averaged real per capita GDP growth of 2.4 percent between 1990 and 2019 — faster than non-tourism-dependent countries in the region (IMF staff). - Lock-in risk for small and island economies: - Few alternative sectors exist to which labor and capital can be shifted in many small island nations. - Example: Seychelles saw increased tuna exports partially offset tourism losses, but these remain a fraction of tourism receipts. - Barbados is attempting to maintain social spending and reprioritize capital spending to create jobs temporarily in nontourism sectors such as agriculture and infrastructure. - Project pipeline and investment impacts: - Caribbean Hotel and Tourism Association projection: as many as 60 percent of the 30,000 new hotel rooms that were in planning or construction throughout the Caribbean will not be completed because of the crisis. ### Adaptation, innovation, and scenarios for reopening - Recovery timelines and demand patterns: - Tourism receipts worldwide are not expected to recover to 2019 levels until 2023. - The World Tourism and Travel Council: travel will be “kickstarted by the less risk averse travelers and early adopters,” with leisure travel leading the comeback; business travel could see a permanent shift or phased return. - Policies and practical measures some countries adopted: - Admission of tourists from “lower-risk” countries with special quarantine requirements (Thailand, Seychelles). - Fiji’s “blue lanes” to allow seafaring visitors to quarantine at sea. - St. Lucia requires a negative COVID-19 test no more than seven days before arrival. - Australia–New Zealand “travel bubble” eliminating quarantine requirements between them. - CARICOM “regional travel bubble” eliminating testing and quarantine within the bubble. - Long-term remote-work visitor permits offered by Barbados, Estonia, Georgia, Antigua and Barbuda, Aruba, and the Cayman Islands, lasting up to 12 months in some places. - Sectoral modernization and sustainability opportunities: - UNWTO encourages worker training to build digital skills for big data, data analytics, and artificial intelligence. - Recovery should be leveraged to improve energy and water efficiency, waste management, and sustainable food sourcing in tourism. - Private sector and some countries developing global protocols for rapid testing at airports and other measures to boost traveler confidence. ### Strategic considerations and outlook - Uncertainty and policy trade-offs: - The persistence of the shock and whether it represents a permanent change to tourism demand is still uncertain, requiring innovative structural policies to adapt to the “new normal” (IMF mission chief to Seychelles). - Policymakers face the challenge of supporting incomes and firms while preserving earlier fiscal and macroeconomic gains. - Final observational quote on confidence and protocols: - St. Lucia Prime Minister Allen Chastanet: “The fact is people do not feel comfortable traveling. We have not put in the necessary protocols to give them that comfort.” *Impact of the Pandemic on Tourism – IMF F&D* --- ## Content in this bundle - **A Simple Guide to Estimating the Impact of COVID-19 on Travel and Hospitality Activity** - [A Simple Guide to Estimating the Impact of COVID-19 on Travel and Hospitality Activity (Markdown version)](/-/media/files/publications/covid19-special-notes/en-special-series-on-covid-19-a-simple-guide-to-estimating-the-impact-of-covid-19.pdf.md){rel="alternate" type="text/markdown"} - [A Simple Guide to Estimating the Impact of COVID-19 on Travel and Hospitality Activity (PDF)](/-/media/files/publications/covid19-special-notes/en-special-series-on-covid-19-a-simple-guide-to-estimating-the-impact-of-covid-19.pdf){rel="external" type="application/pdf"} - **Vous nous manquez !** - [Vous nous manquez ! (Markdown version)](/-/media/files/publications/fandd/article/2020/december/fr/impact-of-the-pandemic-on-tourism-behsudi.pdf.md){rel="alternate" type="text/markdown"} - [Vous nous manquez ! (PDF)](/-/media/files/publications/fandd/article/2020/december/fr/impact-of-the-pandemic-on-tourism-behsudi.pdf){rel="external" type="application/pdf"} - **Impact of the Pandemic on Tourism – IMF F&D** - [Impact of the Pandemic on Tourism – IMF F&D (Markdown version)](/-/media/files/publications/fandd/article/2020/december/impact-of-the-pandemic-on-tourism-behsudi.pdf.md){rel="alternate" type="text/markdown"} - [Impact of the Pandemic on Tourism – IMF F&D (PDF)](/-/media/files/publications/fandd/article/2020/december/impact-of-the-pandemic-on-tourism-behsudi.pdf){rel="external" type="application/pdf"} - **Тайная работа слонов – Финансы и развитие – декабрь 2020 года** - [Тайная работа слонов – Финансы и развитие – декабрь 2020 года (Markdown version)](/-/media/files/publications/fandd/article/2020/december/ru/chami.pdf.md){rel="alternate" type="text/markdown"} - [Тайная работа слонов – Финансы и развитие – декабрь 2020 года (PDF)](/-/media/files/publications/fandd/article/2020/december/ru/chami.pdf){rel="external" type="application/pdf"} - **大象的秘密工作 - 金融与发展 - 国际货币基金组织季刊** - [大象的秘密工作 - 金融与发展 - 国际货币基金组织季刊 (Markdown version)](/-/media/files/publications/fandd/article/2020/december/zh/chami.pdf.md){rel="alternate" type="text/markdown"} - [大象的秘密工作 - 金融与发展 - 国际货币基金组织季刊 (PDF)](/-/media/files/publications/fandd/article/2020/december/zh/chami.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2020/12/impact-of-the-pandemic-on-tourism-behsudi_