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50 I Southeast Europe bne June 2021
GDP recovery
The first scenario assumes the pandemic continues to recede and tourism levels regain their pre-pandemic levels by
the start of 2022. The second scenario
is for a slower recovery and pre- pandemic levels are only reached at the end of 2022. And in the third the pre-pandemic levels are achieved only at the start of 2023.
“Even the most optimistic scenario would leave visitor numbers substantially below their 2019 levels this year – around
60% in Thailand and Vietnam, 50% in Croatia and South Africa, and 40% in
the Dominican Republic, Mexico and Turkey,” IIF estimates.
“However, a full recovery by the start of next year would be surprisingly fast given the slow vaccination campaigns in some countries. In a more realistic scenario, numbers could stay 70-80% below pre-pandemic levels this year in some places,” IIF calculates.
First in, last out; the tourism sector will likely take the longest of all sectors hit by the pandemic to recover, says IIF, and that will have big knock-on effects for the economies that are dependent on tourism for income.
Comparing the seasonally adjusted real GDP in Thailand with the overall EM universe (excluding China), IIF forecast that Thailand will reach the fourth quarter of 2019 GDP levels roughly two
Exhibit 1. Tourism remains suppressed, ...
quarters later only in the first quarter of 2022 – two quarters later than emerging markets as a whole. Indeed, drilling into Thailand’s GDP numbers and it seems that most of the sectors not related to tourism have already fully recovered
the ground lost since 2019.
Croatia’s economy is expected to post a strong bounce-back growth of 5% in 2021, after contracting by 8% in 2020, and should exceed its pre-crisis level in 2022, the European Commission said in its spring 2021 economic forecast released on May 12. In 2022, the GDP should expand by 6.1%.
“Fuelled by pent-up demand and the accumulation of involuntary savings, household consumption is set to provide a boost to growth as constraints on the consumption of services ease. This trend should be supported by moderately positive labour market developments,” the EC noted in the report.
However, the exports of services, mainly of tourism, are expected to remain below pre-crisis levels throughout 2022 and not fully recover until 2023. However, just how fast they do recover over 2021 and 2022 will be an important growth driver.
And the country is still battling with the virus. In April the government decided to extend the restrictions imposed
to contain the spread of coronavirus without specifying for what period, Deputy Prime Minister Davor Bozinovic
Exhibit 2. with Asian countries most affected.
said on April 18. Despite restrictions, Croatia has faced a rising number of new cases in the past several weeks, with the average daily number going significantly above 2,000.
Turkey has been suffering even more. There as a mild economic expansion in the first quarter of this year but the economy is expected to slip back into recession in the second quarter, as it has been fighting multiple crises in addition to the corona pandemic.
In addition, the government appears to have lost control of the epidemic in the country and went back into full lockdown at the end of May to try to contain the spread of the virus.
Officials are worried that if they don’t act now, the country’s international tourism industry could for the second year running suffer devastating losses. Tourism accounts for around 11% of the Turkish economy. It earned Turkey a record $34bn in 2019, but last year the impact of the pandemic caused that figure to plummet by around $22bn.
"At a time when Europe is entering a phase of re-opening, we need to rapidly cut our [daily] case numbers to below 5,000 not to be left behind. Otherwise we will inevitably face heavy costs in every area, from tourism to trade and education," Turkish President Recep Tayyip Erdogan said when announcing the new measures.
Exhibit 3. The tourism recovery will take time, ...
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