Following strong growth at the global level in 2019, the tourism and travel industry has been among the worst-hit sectors of the economy during the ongoing pandemic. Seen as a powerful economic engine in developing countries, and accounting for 5 – 20% of their GDP, tourism, and travel are now in dire need of measures to boost their recovery. The following is an overview of the impact of the COVID-19 pandemic on developing countries with the highest contribution from the tourism sector to their GDP.
Tourism and travel, one of the world’s largest sectors in terms of contribution to GDP, has been severely exposed to the economic shocks triggered by the ongoing pandemic. Experts from the Organization for Economic Cooperation and Development (OECD) have expressed their concern regarding an expected 60% decline in international tourism in 2020 which may even reach 80% if the recovery is delayed.
The sector, which accounted for 10% of global GDP in 2019 and ensured over 300 million jobs worldwide, desperately needs swift concerted efforts to both avoid devastating repercussions and to hasten its recovery. In a bid to support the tourism and travel industry, many governments have been undertaking measures to deliver safe experiences to potential tourists so as to meet rigorous precautionary measures. Nevertheless, in spite of some destinations becoming available, visitors are not rushing to book their holidays during this uncertain period.
The seven of the developing countries in terms of the contribution of their travel and tourism industry to GDP are shown below. This list has been compiled based on data provided by the World Travel and Tourism Council.
Mexico
Being among the 10 most visited countries in the world, Mexico hosted 45 million international tourists in 2019, seeing the contribution of its tourism and travel sector amounting to almost US$200 billion which accounted for over 15% of the country’s GDP. Taking into consideration Mexico’s strong reliance on the tourism industry, the pandemic has inflicted a major setback on the country as the number of international tourists decreased by 78% in April 2020 compared to the same period in 2019. According to Miguel Torucco, Mexico’s Tourism Minister, the sector will not fully recover until 2023. Nevertheless, from July 2020 the industry began to show some signs of recovery as revenues reached US$509 million, up from the record low of US$131 million in April 2020.
India
India heads the list of countries that have created the largest number of jobs in the tourism and travel sector, with the figure reaching nearly 14 million in 2019. The tourism industry had witnessed an almost 5% growth last year, but the restrictions linked to the spread of the coronavirus have brought this growth trajectory to a halt. The Confederation of Indian Industry has forecasted losses in the tourism sector of between US$9 billion and US$21 billion in 2020 – 2021. The travel ban has also impacted the aviation sector which may incur additional losses of US$1 billion in the last quarter of 2020. The tourism industry may not reach the pre-crisis level until 2024.
Brazil
Latin America’s largest travel and tourism industry witnessed robust growth over the past few years, contributing about 7.7% to the national GDP and 3% to the total number of jobs in 2019. Brazil is the country with the strongest domestic tourism demand in the world which significantly reduces its dependence on inbound tourists. Nevertheless, the revenues of tourism companies collapsed in 2020 due to the restrictive pandemic measures. OECD experts forecast a 46.9% decrease in the sector’s contribution to GDP in 2020 and 12.6% in 2021, compared to 2019 data.
Thailand
Breathtaking views and beaches, culturally rich destinations, a wide range of local food won the compassion of foreign tourists, transforming the Thailand tourism sector into a major contributor to the country’s economy, delivering US$107 billion to the country`s GDP in 2019. More than 70% of tourism revenue was generated from spending by foreign visitors during last year. The overall contribution of the tourism and travel sector reached 19.7% of Thailand’s GDP. With the advance of the COVID-19 pandemic and the ensuring restrictive travel measures, foreign arrivals tumbled sharply. The country’s authorities expect a 65% decrease in inbound tourists – a severe blow to the Thai tourism and travel industry. To mitigate the negative effects of this, the Thai authorities decided to encourage its residents to go on holiday in their own country. About 800,000 Thais have benefited from the subsidized travel scheme designed to boost the recovery from the economic slump and ensure business continuity. Thais could take advantage of a 40% discount on hotels, travel tickets, eating out etc.
Philippines
Philippines’ travel and tourism sector witnessed strong growth from 2015 to 2019. The contribution of the sector to the country’s GDP increased by 8.6% in 2019 alone, representing 25.3% of the economy. On the same period, Philippines ranked among the countries with the highest number of jobs in tourism, with the number of employees in the sector totaling 5.7 million people in 2019. As the pandemic hit, the country saw the growth rate of foreign tourist arrivals sharply decrease with the tourism sector reporting 77% losses in international tourism revenues. According to Philippine Tourism Secretary Bernadette Romulo-Puyat, around 4.8 million workers from the sector have been severely affected by the lockdown measures. The most popular destinations have been reopened for locals but international tourism is more likely to recover in the second half of 2021, according to the Philippines’ Department of Tourism.
Russia
The tourism sector of the largest country in the world, the Russian Federation, attracted 24.4 million foreign tourists in 2019 and resulted in a remarkable contribution of US$84 billion to the national GDP. However, Russia had closed its borders by the end of March, shortly after the pandemic hit, blocking inbound tourism. At the same time, the high risk of becoming infected by COVID-19 made Russians change their minds about travel causing them to cancel their visits within their own country. Together, these scenarios struck a severe blow to the country’s tourism industry which is expected to lose over one million jobs in 2020 and lead to the closure of 30% of small- and medium-sized companies.
Saudi Arabia
In 2019, Saudi Arabia, a high-income oil-exporting developing country, witnessed a continuous growth trajectory in the tourism sector to become the fastest emerging country in the Middle East with a 14% increase in direct contribution of travel and tourism to GDP. The trend was partly due to new visa facilitation policies which opened up the possibility of a holiday in Saudi Arabia to half of a million international tourists in just six months after the launch of an international tourism visa system. Despite the unprecedented challenges triggered by the coronavirus pandemic, Saudi Arabia remains fairly optimistic as to the development of its tourism industry, with the Saudi tourism minister pledging measures to realize the full potential of the sector despite even under the ongoing circumstances.
In the absence of revenues generated by international tourism, the Saudi Tourism Authority launched a variety of summer offerings for residents which “revitalized tourism businesses, enabled new enterprises to launch and increased the tourism offering for both domestic and international visitors going forward”, said the country’s tourism minister said.
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