Tourism in emerging markets a geared play on Pfizer-type vaccines

  • Tourism decimated (down 65% in 1H20) in the pandemic (unlike remittances) and offers a geared play on Covid-19 vaccines
  • Tourism over 10% of GDP in Barbados, Croatia, Jamaica, Iceland, Maldives, Thailand and between 5-10% in ...
  • Costa Rica, Egypt, Georgia, Jordan, Lebanon, Mauritius, Mexico, Morocco, Philippines, Sri Lanka, Tunisia, UAE, Vietnam
Tourism in emerging markets a geared play on Pfizer-type vaccines

International tourist arrivals were down 65% in 1H 2020 (with a 93% yoy decline in June and c80-85% in July and August), according to the UNWTO. In the context of this decimation, the Covid-19 vaccine announcement from Pfizer-BioNTech offers hope.

Furthermore, the precedent of China demonstrates the potential rebound should vaccine development combat the pandemic. After its successful lockdown strategy to contain the virus, China domestic air travel capacity utilisation was back up to 90% in July.

There are, of course, many uncertainties ahead on Pfizer-type vaccines: side effects and remaining trials, full domestic and international regulatory approvals, time to manufacture, speed and cost of distribution (eg cold storage), number of doses, duration of immunity, defence against virus mutation, variability international availability and deployment, and price.

All of this means it will still take years to return to pre-pandemic levels of tourism. But there is more cause for optimism than before. It is perhaps not until 2024 or 2025 that international tourism fully recovers, but it should start growing again in 2021. That matters given the external account relief for many countries in small emerging markets (EM) from surprisingly robust remittances likely wanes next year.

In many small EMs, the contribution to the economy from tourism is between 5-10% and, for some, it is over 10%.

  • Over 10% of GDP: Barbados, Croatia, Jamaica, Iceland, Maldives, Thailand.

  • Between 5-10%: Costa Rica, Egypt, Georgia, Jordan, Lebanon, Mauritius, Mexico, Morocco, Philippines, Sri Lanka, Tunisia, UAE, Vietnam

Tourism direct contribution to GDP (2019, %)

Related reading

Tourism: 'Staycation' buffer for some (India) more than others (Iceland) in EM (June 2020)

Remittance drop in 2021 forecast by World Bank despite a better 2020 than feared (November 2020)


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