Page 51 - bne_May 2021_20210601

bne June 2021 Southeast Europe I 51
And Albania’s nascent ambitions to build up a tourism industry have taken a blow right at the start of the process. As bne IntelliNews has reported, what slender resources Albania already has have been crushed by the halt in tourist flow. With what may be some of the last unspoilt beaches in Europe, the government
was planning to invest $100mn into its airport to better serve inbound holidaymakers at the start of this year.
“This investment plan by the new concessionaire is an ambitious plan, which aims to significantly improve the operation of Mother Teresa Airport and turn Tirana International Airport into
a positive example in the region, with an extraordinary impact on the growth of tourism in Albania and improving the ease of doing business,” Tirana International Airport (TIA) announced in January.
The government also hopes to create the country’s first ski resort at Korça, Prime Minister Edi Rama said during a visit to the city at the end of January.
The supporting hospitality and transport infrastructure is also being developed and has made significant progress, but the destination is still not well known and the coronacrisis has set plans back.
Current account recovery
Beyond the impact on GDP and labour markets, the slow recovery of tourism
Exhibit 4. ... and weigh on growth in the near term.
also has important consequences for countries’ external balances.
In 2020, many EMs saw an improvement in their current accounts despite the decline in services credits, largely due to substantially lower imports of goods and services. Tourists that used to spend their dollars abroad were staying at home, which is a net win for the current account. Russians spend between $2bn and $3bn a year in Turkey while on holiday there.
The halt in outbound tourism acts
as an automatic cushion for most countries’ current accounts and reduces external financing needs
in a time of risk-averse sentiment
in global financial markets. However, the stay-at-home boost is not enough to compensate for the fall in revenues for the favourite holiday destinations.
Now that tourism is beginning to recover, this will hurt current account positions as the “import of services” recovers. (Going overseas is a drain on a country’s stock of foreign exchange and so counts as an import.)
“Trade balances will revert to pre- pandemic levels in 2021 to a certain extent despite concurrently improving exports. With tourism revenues
still significantly suppressed, external pressure is therefore likely to rise,” says IIF.
Exhibit 5. Current accounts adjusted markedly, ...
Exhibit 6. ... but rebounding imports are a challenge.
Source: Haver, IIF
www.bne.eu