In a paper titled “Tourism in the post-pandemic world”, the International Monetary Fund stressed the importance of fiscal stimulus to revive the tourism sector and help offset some of the losses in the economy caused by the global tourism industry in countries like the Philippines.
The IMF said member countries of the Association of Southeast Asian Nations, including the Philippines, have some fiscal space available to temporarily shift employment and spending into other segments of the economy and support the tourism sector.
The United Nations World Tourism Organization earlier reported that the global tourism industry suffered its worst year ever in 2020, losing an estimated $1.3 trillion in revenues as international arrivals plunged by 74 percent due to the severe impact of the Covid-19 pandemic on travel.
While most tourism-dependent countries rely on global developments to exit the crisis, the IMF said policy and institutional choices would also play a critical role in the economic recovery.
It also warned that economic strains in micro, small and medium enterprises as much as larger service industry firms like airlines could spill over to the financial sector, further hampering recovery. It pointed out that some countries have proactively provided fiscal stimulus and financial support for tourism and related sector, including workers, business, and national airlines.
In the Philippines, both Philippine Airlines and Cebu Pacific have reported huge losses and have started to lay off thousands of workers.
“Fiscal and macro-financial policies can play a critical role in mitigating the deep and long-lasting economic scarring in many tourism-dependent economies,” IMF said.
A country that was counting on tourism to play a significant role in its economic dream needs to do more to ensure that the battered industry and the thousands, if not millions of workers in related sectors still have a chance at recovery and eventual success. Banking on the private sector to bail themselves out of this rut might not be enough, given the time and opportunities that have been lost in 2020. A government that considers the tourism industry crucial to its future has to put its money where its mouth is.*