Pandemic-related lockdowns, flight cancellations, and border closures may be putting a crimp on summer vacation plans. However, the precipitous drop in tourism will have an outsized impact on countries that rely on foreign travelers—with potentially large-scale effects on their economies’ national accounts.
Costa Rica, Greece, Morocco, Portugal, and Thailand could be among the hardest hit with losses in tourism proceeds exceeding 3 percent of GDP, according to the IMF’s recently released 2020 External Sector Report.
The chart calculates direct tourism impacts on imports, exports, and current account balances under a scenario that envisions gradual reopenings in September, but a drop of about 70 percent in tourism receipts and international tourism arrivals in 2020.
A country’s current account balance is a measure of its total transactions—which includes but is not limited to trade in goods and services—with the rest of the world. For some economies, a drop in tourism (which is considered an export) could have an impact on overall current account balances.
For example, in Thailand, a decrease in tourism due to COVID-19 could bring the country’s overall exports down by 8 percentage points of GDP and have a direct net impact of about 6 percentage points of GDP on its current account balance in 2020. That could erode part of the 7 percent overall current account surplus the country had in 2019.
COVID-19 situation in Thailand as of 2 March 2021
Adjustments in Thailand’s tourism industry
Thailand, especially the tourism and hospitality industry, have made various adjustments to prepare to welcome travellers again when the country is fully open.
Due to the COVID-19, businesses in Thailand, especially the tourism and hospitality industry, have made various adjustments to make it through this situation to prepare to welcome travellers again when the country is fully open.
Thai government may subsidise an unlimited domestic air pass
The government looks to offer a subsidy for an unlimited travel pass to people who buy domestic air tickets in advance to help struggling airlines in Thailand.
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