Tourism’s vital role in global economic growth- IMF Report

 

A recent International Monetary Fund (IMF) report has underscored the pivotal role of tourism in spearheading global economic resurgence and expansion. Drawing from insights furnished by the United Nations World Tourism Organization (UNWTO), which forecast a potential revival to 95% of pre-pandemic tourist figures by the year’s end under optimistic scenarios, the IMF’s report delineates the favorable consequences that the tourism sector’s rapid resurgence is poised to usher in for select economies across the globe.

Furthermore, the World Economic Outlook (WEO) Report anticipates a global economic growth rate of approximately 3.0% in 2023 and 2.9% in 2024. Though these forecasts exhibit an improvement over earlier projections, they nonetheless fall short of the 3.5% growth rate attained in 2022. This disparity underscores the enduring repercussions of the pandemic and geopolitical challenges, compounded further by the inflation.

Tourism’s intrinsic role in fostering economic advancement

The WEO report conducts an exhaustive scrutiny of economic progress in diverse global regions, identifying an intrinsic connection between performance and particular sectors, with tourism emerging as a standout exemplar. Most notably, economies that boast “substantial travel and tourism sectors” showcase remarkable economic resilience and elevated levels of economic activity. More specifically, countries in which tourism constitutes a significant share of the Gross Domestic Product (GDP) have exhibited swifter recoveries from the pandemic’s impact when juxtaposed with economies where tourism holds marginal significance.

Positive forecasts

The analysis from the IMF coincides with the most recent assessment of global and regional tourism prospects by the UNWTO. Back in September 2023, the UNWTO World Tourism Barometer disclosed a positive trend in international tourist arrivals. After attaining 80% in the first quarter of 2023, these arrivals reached 85% of pre-pandemic levels in the second quarter and rose to 90% in July 2023. This upward trajectory was driven by sustained accumulated demand, resulting in an estimated 700 million international tourists traveling between January and July 2023. This figure marked a 43% increase compared to the same period in 2022, albeit 16% lower than the numbers recorded in 2019.

By regions, the Middle East emerged as the top performer in the first seven months of 2023, surpassing pre-pandemic levels by 20%. Europe, as the world’s largest destination region, reached 91% of its pre-pandemic levels, primarily due to strong demand within the region itself. Africa made substantial progress, recovering 92% of its pre-crisis visitor numbers during this seven-month period, while the Americas achieved 87%. However, in Asia and the Pacific, international arrivals only reached 61% of pre-pandemic levels.

When examining subregions, North Africa, Central America, and Southern Mediterranean Europe exceeded pre-pandemic levels by 8%, 2%, and 1%, respectively, in the January-July 2023 period.

These findings illustrate that international tourism is steadily advancing towards the UNWTO’s projection of reaching 80% to 95% of pre-pandemic levels in 2023, as initially forecasted in the January 2023 World Tourism Barometer. The outlook for September to December 2023 suggests ongoing recovery, albeit at a more moderate pace following the peak travel season of June to August. However, the challenging economic backdrop may influence tourists’ spending patterns for the remainder of the year. That is, travelers are increasingly prioritizing value for money, opting for destinations closer to home and favoring shorter trips in light of the prevailing economic uncertainties.