Fitch: Tourism receipts to remain weak next year

MANILA, Philippines — The impact of the coronavirus disease 2019 or COVID-19 pandemic is seen disrupting international services trade, particularly tourism in the Asia-Pacific region including the Philippines until next year, according to Fitch Ratings.

In a report on the impact of the coronavirus on Asia-Pacific tourism, the debt watcher said international tourism flows in the region would remain subdued through much of 2021.

Despite the slow lifting of cross-border travel restrictions, Fitch said uncertainty lingers around the evolution of the pandemic, as well as the availability of effective vaccines and treatment.

Data showed inbound tourism receipts account directly for at least five percent of gross domestic product (GDP) for more than a third of Fitch-rated Asia-Pacific sovereigns.

For one, inbound tourism receipts account for around three percent of GDP in the Philippines form 2016 to 2018, while outbound tourism expenses averaged about four percent during the period.

Data from the World Tourism Organization showed international tourism arrivals plunged 65 percent in the first half of the year, with Asia-Pacific booking a huge drop of 72 percent.

The United Nations body reported that the international tourism industry lost around $460 billion from January to June as arrivals plunged due to the global health crisis.

For the Philippines alone, data from the Department of Tourism (DOT) showed receipts plunged by 72 percent to P81 billion from January to July as arrivals fell 73 percent to 1.3 million foreign visitors from 4.86 million.

The government through Republic Act 11494 or the Bayanihan to Recover as One Act (Bayanihan 2) has allocated P10 billion in financial aid to the tourism industry.

Fitch said Macao, Maldives, Thailand and Hong Kong are expected to experience a sharp drop in GDP due to plummeting international tourist arrivals.

“Other Fitch-rated sovereigns in Asia Pacific are certainly not impervious from the hit to tourism, especially in economies where the sector has expanded rapidly in recent years, such as Vietnam and Sri Lanka,” it said.

According to Fitch, governments that have succeeded in curbing COVID-19 have begun to cautiously ease domestic lockdowns and border controls since late second quarter.

The Philippines has imposed the longest and strictest lockdown in the world placing the entire Luzon under enhanced community quarantine in the middle of March resulting to a record GDP contraction of 16.5 percent in the second quarter from 0.7 percent in the first quarter.

Fitch said countries with high reliance on fiscal revenue from the tourism and related sectors but with fiscal headroom for countercyclical stimulus and sufficient external buffers such as Macao and Hong Kong are better placed.

“Elsewhere, demand for travel is being diverted domestically, as hotel occupancy rates bottom out despite border closures. A faster domestic tourism recovery will offset revenue loss due to falling inbound tourists, but only partially,” it said.