In the summer of 2019, one could have described a stroll through the streets of Istanbul or along the coast in Santorini as bustling. There would have been a great mix of cultures, languages and people around. Fast forward to 2020, and those same destinations were likely eerily empty, echoing the silence of the global tourism industry grappling with the COVID-19 pandemic. However, 2023 presented a glimmer of hope. Air travel has made a remarkable comeback, with weekly numbers poised to surpass pre-pandemic 2019 levels for the first time in four years. Although annual figures have not fully recovered, the weekly trends of increased air travel are promising, highlighting the vital role of international tourism in the resurgence of developing economies.
Importance of International Tourism to Developing Economies
One can characterize many developing economies as “tourism-dependent.” These countries are usually small or isolated, such as Jamaica, Aruba or the Dominican Republic. Other larger countries, with still developing economies can be classified as heavily reliant on tourism, including Thailand, Greece, Croatia, Turkey and Mexico. These countries, having limited diversified economic streams, are prone to higher poverty levels and were hit particularly hard by the pandemic’s impact on the tourism industry. The percentage of the population classified as ‘the working poor’ is significantly higher in these countries, and the removal of a prominent economic stream exacerbated their challenges.
COVID-19’s Impact on International Tourism
The pandemic caused international tourism to plummet by a staggering 83% in 2020, with 2.40 billion tourists worldwide. This was an abrupt disruption for tourism-dependent economies, whose average net international tourism revenues were a significant portion of GDP in the years preceding 2020. Examples include the following nations and tourism’s contribution to their GDP:
- Croatia, 15%
- The Dominican Republic, 8%
- Thailand, 8%
- Greece, 7%
For the countries where economies are still developing and tourism makes up a significant part of the GDP, the sudden lack of tourism diminished revenue streams and removed jobs, which increased unemployment and negatively impacted the “working poor” the most, compounding poverty and its subsequent issues. A specific example of this is Santorini, where it is estimated that nearly 75% of the population depends on tourism for income.
COVID-19 Relief Initiatives and Their Impact on Tourism Industries
It is important to mention initiatives that were instituted to help combat the negative impacts of decreased tourism in these countries. In Greece, the government implemented a fiscal package of measures totaling about 13.7% of GDP in 2020, including loan guarantees, health spending, temporary financial support to vulnerable individuals, extension of unemployment benefits, support for short-term employment, subsidies to households and fiscal support to hard hit businesses, including the travel and tourism industry. The measures helped support those the lack of tourism impacted, as well as individuals living in poverty in the country.
Another example is Thailand, where a fiscal package amounting to at least 9.6% of GDP was instated, covering health-related spending, assistance for workers, farmers and entrepreneurs that COVID-19 affected, support for individuals and businesses through loans and tax relief, reduced water and electricity bills and measures to support local tourism. Specifically, this goal was to support travel and tourism industries through domestic travel, to mitigate the lack of international travel. From July 15 until October 2020, there was a tourism subsidy package, “We Travel Together,” covering up to 40% of travel costs for 5 million domestic tourists.
Despite these government issues, examination of tourism data, and GDP contracts indicate that support packages were not enough to compensate for the lack for international travel.
A Look at the Numbers
A comparison between 2019, 2020 and 2023 tourism numbers reveals the resilience and importance of developing economies. These countries saw the following changes in inbound tourism, for the listed years, respectively:
All figures represent international arrivals in the country and are in millions:
- Croatia: 19.6, 7, 16.2
- Greece: 34, 7.4, 17.4
- Mexico: 45, 24.3, 31.9
- Thailand: 39.8, 6.7, 19
- Turkey: 51.8, 15.9, 29.9
Evidently, in 2019, countries including Croatia, Greece, Mexico, Thailand and Turkey were prominent tourist destinations. Remarkably, they continue to rank highly in 2023. The countries are developing economies heavily reliant on inbound tourism. Increased air travel foreign arrivals to the nations is a promising sign of economic recovery.
Why it Matters
The pandemic caused an economic shock to these nations. For instance, Greece, which was projected to grow by 2.3% in 2020, actually contracted by more than 8% due to its reliance on tourism. Tourism plays a vital role in economic growth by supporting foreign exchange reserves, driving infrastructure investments, enhancing human capital, creating jobs and boosting income levels. Those living in poverty are most affected by changes in human capital and job creation. The resultant GDP growth fosters a positive cycle. With a continuing rise in GDP, countries can invest in their infrastructure, thereby further increasing international tourism as conditions improve. This will in turn create further job opportunities for the working poor and increase individual purchasing power.
Looking at 2023 so far, the resilience and adaptability of these countries, and of travelers, becomes evident. Croatia, Greece, Mexico, Thailand and Turkey, though not back at 2019 tourism levels yet, have proved remarkable recovery so far, especially prior to winter holiday travel numbers. Croatia has seen a 79% increase in international tourists since 2020, Greece is up by 81%, Mexico shows a 27% improvement, Thailand is the standout with a 96% growth and Turkey has surged by 61%. Crucially, tourism revenues in Turkey have shown a promising 23.1% growth to $13 billion in the second quarter of 2023, with 85.5% coming from foreign visitors. This signals a strong comeback in the country’s tourism industry.
Next Stop, Economic Improvement
In summary, while the COVID-19 pandemic took a heavy toll on tourism-dependent economies, their resilience and the spirit of travelers are now leading to a resurgence of the industry. The rebound in international travel post-pandemic is intrinsically tied to the economic well-being of these countries. Improving economies in developing nations creates jobs, elevates GDP per capita, reduces poverty rates and enhances the overall quality of life. Increased air travel and international tourism serves as a catalyst for progress, shaping a brighter and more prosperous future for these nations and their people.
– Kailey Schwinghammer