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Macro & Investment Insights

Tourism: How Asia and other emerging markets could bounce back

  • 11 June 2021
  • 5 min read

Key points

  • The tourism industry suffered a massive shock in 2020 due to the pandemic, impacting many emerging markets
  • In Asia, Thailand, Hong Kong, Malaysia, and Singapore are among the most dependent on tourism as a driver of GDP growth. Outside Asia, Turkey is also highly dependent
  • The economic recovery is underway but will likely be long and arduous for developing markets. This reflects in part the slow pace of vaccination, and the low probability of quickly achieving something close to collective immunity – which would allow full international travel to resume
  • Containing the virus outbreak is a pre-requisite for any sort of tourism recovery – domestic or outbound. There are silver linings for the sector, with rising domestic tourist flows in countries where the pandemic is under control. However, a complete recovery – featuring the return of international travellers – is still some time away

Tourism left reeling

Tourism has been one of the sectors most affected by the COVID-19 pandemic. Governments worldwide imposed strict movement restrictions and closed borders in the hope of stopping the spread of the virus. According to the United Nation’s World Tourism Organization, revenue loss during 2020 in the international tourism sector was projected at $1.3tn and total international arrivals fell by one billion, or 74%, from 2019. The overall estimated damage was more than 11 times greater than in 2009, in the wake of the global financial crisis.

Asia, in particular, saw its tourism industries battered by the pandemic travel bans. Arrivals across the region had plummeted to unprecedented lows by the second quarter (Q2) of 2020 (Exhibit 1).

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